~~Our~~(“NYSE”). The Audit Committee held six (6) formal meetings and several informal meetings during the fiscal year ended December 31, 2008. The Board ~~of Directors~~has determined that each member of the Audit Committee ~~(Clunet~~is an “audit committee financial expert,” as defined by SEC rules.See“Report of the Audit Committee.”

The Compensation Committee operates pursuant to a charter that was approved by the Board in March 2004. A copy of the Compensation Committee Charter is available under the “Investor Relations-Officers and Directors” section of our website atwww.suncommunities.com. The Compensation Committee, among other functions, (i) reviews and approves corporate goals and objectives relevant to the compensation of the Chief Executive Officer and such other executive officers as may be designated by the Chief Executive Officer, evaluates the performance of such officers in light of such goals and objectives, and determines and approves the compensation of such officers based on these evaluations, (ii) approves the compensation of the Company’s other executive officers, (iii) recommends to the Board for approval the compensation of the non-employee directors and (iv) oversees the Company’s incentive-compensation plans and equity-based plans. The current members of the Compensation Committee are Messrs. Ted J. Simon (Chairman), Clunet R. Lewis and Ronald L. Piasecki, all of whom are independent directors under the NYSE rules. During the fiscal year ended December 31, 2008, the Compensation Committee held five (5) formal meetings and took various actions pursuant to resolutions adopted by unanimous written consent.See“Report of the Compensation Committee on Executive Compensation.”

The Nominating and Corporate Governance Committee (the “NCG Committee”) operates pursuant to a charter that was approved by the Board in March 2004. A copy of the Nominating and Corporate Governance Committee Charter is available under the “Investor Relations-Officers and Directors” section of the Company’s website atwww.suncommunities.com. The Nominating and Corporate Governance Committee, among other functions, is responsible for (i) identifying individuals qualified to become Board members, consistent with criteria approved by the Board, (ii) recommending that the Board select the committee-recommended nominees for election at each annual meeting of stockholders, (iii) developing and recommending to the Board a set of corporate governance guidelines applicable to the Company, and (iv) periodically reviewing such guidelines and recommending any changes, and overseeing the evaluation of the Board. The current members of the Nominating and Corporate Governance Committee are Messrs. Ronald L. Piasecki (Chairman), Clunet R. Lewis and Ted J. Simon, all of whom are independent under the NYSE rules. The Nominating and Governance Committee held one (1) formal meeting during the fiscal year ended December 31, 2008.

The Executive Committee was established to generally manage the day-to-day business and affairs of the Company between regular Board meetings. In no event may the Executive Committee, without the prior approval of the Board acting as a whole: (i) recommend to the shareholders an amendment to the Company’s Charter; (ii) amend the Company’s Bylaws; (iii) adopt an agreement of merger or consolidation; (iv) recommend to the shareholders the sale, lease or exchange of all or substantially all of the Company’s property and assets; (v) recommend to the shareholders a dissolution of the Company or a revocation of a dissolution; (vi) fill vacancies on the Board; (vii) fix compensation of the directors for serving on the Board or on a committee of the Board; (viii) declare dividends or authorize the issuance of the Company’s stock; (ix) approve or take any action with respect to any related party transaction involving the Company; or (x) take any other action which is forbidden by the Company’s Bylaws. All actions taken by the Executive Committee must be promptly reported to the Board as a whole and are subject to ratification, revision and alteration by the Board, except that no rights of third persons created in reliance on authorized acts of the Executive Committee can be affected by any such revision or alteration. The current members of the Executive Committee are Messrs. Gary A. Shiffman and Ted J. Simon. The Executive Committee did not hold any formal meetings during the fiscal year ended December 31, 2008 but took various actions pursuant to resolutions adopted by unanimous written consent.

A Special Litigation Committee was established in April 2006, to oversee and monitor the ongoing civil litigation between the SEC and the Company’s Chief Executive Officer and two other employees of the Company arising out of the SEC’s inquiry into the accounting for the SunChamp transactions reflected in the Company’s 2000, 2001 and 2002 financial statements and the indemnification obligations of the Company with respect to such litigation. The Special Litigation Committee was disbanded in September 2008.

Independence of Non-Employee Directors

The NYSE rules require that a majority of the Board consist of members who are independent. There are different measures of director independence—independence under New York Stock Exchange rules, under Section 16 of the Exchange Act and under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The Board has reviewed information about each of the Company’s non-employee directors and determined that Paul D. Lapides, Clunet R. Lewis, Robert H. Naftaly, ~~and~~Ronald L. Piasecki, Ted J. ~~Simon), qualify~~Simon and Stephanie W. Bergeron are independent directors. The independent directors meet on a regular basis in executive sessions without management participation. In 2008, the executive sessions occurred after some of the regularly scheduled meetings of the entire Board and may occur at such other times as ~~“audit committee financial experts” as~~the independent directors deem appropriate or necessary. Although the Company has not designated a lead director, typically the Chairman of the Audit Committee presides at the executive sessions of the independent directors.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee has been or will be one of the Company’s officers or employees. The Company does not have any interlocking relationships between its executive officers and the Compensation Committee and the executive officers and compensation committees of any other entities, nor has any such ~~term is defined under Item 401~~interlocking relationship existed in the past.

Consideration of ~~Regulation S-K. Mr. Lewis, Mr. Naftaly and Mr. Simon are “independent” as~~Director Nominees

Board Membership Criteria

The Board of Directors has established criteria for Board membership. These criteria include the following specific, minimum qualifications that ~~term is used~~the NCG Committee believes must be met by an NCG Committee-recommended nominee for a position on the Board:

The candidate must have experience at a strategic or policymaking level in ~~Item 7(d)(3)(iv)~~a business, government, non-profit or academic organization of ~~Schedule 14A under the Exchange Act.~~high standing;

~~Our Audit Committee adopted our Audit~~The candidate must be highly accomplished in his or her field, with superior credentials and Non-Audit Services Pre-Approval Policy, which sets forth the procedures and the conditions pursuant to which permissible services to be performed by our independent public accountants may be pre-approved.recognition;

~~Our~~The candidate must be well regarded in the community and must have a long-term reputation for high ethical and moral standards;

The candidate must have sufficient time and availability to devote to the Company’s affairs, particularly in light of the number of boards on which the nominee may serve; and

The candidate’s principal business or occupation must not be such as to place the candidate in competition with the Company or conflict with the discharge of a director’s responsibilities to the Company or its shareholders.

In addition to the minimum qualifications for each nominee set forth above, the NCG Committee will recommend director candidates to the full Board for nomination, or present director candidates to the full Board for consideration, to help ensure that:

A majority of the Board of Directors ~~adopted a Financial Code~~shall be “independent” as defined by the NYSE rules;

Each of ~~Ethics~~its Audit, Compensation and NCG Committees shall be comprised entirely of independent directors; and

At least one member of the Audit Committee shall have such experience, education and qualifications necessary to qualify as an “audit committee financial expert” as defined by the rules of the SEC.

Consideration of Shareholder Nominated Directors

The NCG Committee’s current policy is to review and consider any director candidates who have been recommended by shareholders in compliance with the procedures established from time to time by the NCG Committee. All shareholder recommendations for ~~Senior Financial Officers, which governs the conduct of~~director candidates must be submitted in writing to our ~~senior financial officers. A copy of this code is available on our website~~Secretary at~~www.suncommunities.com~~ under the heading “Investor Relations”, “Officers and Directors” and subheading “Governance Documents” and is also available in print to any stockholder upon written request addressed to Investor Relations, Sun Communities, Inc., 27777 Franklin Road, Suite 200, Southfield, ~~Michigan 48034.~~MI 48034, who will forward all recommendations to the NCG Committee. The Company did not receive any shareholder recommendations for director candidates for election at the Annual Meeting. All shareholder recommendations for director candidates for election at the 2010 annual meeting of shareholders must be submitted to our Secretary on or before January 1, 2010 and must include the following information:

The shareholder’s name, address, number of shares owned, length of period held and proof of ownership;

~~Our Board~~The name, age, business and residential address, educational background, current principal occupation or employment, and principal occupation or employment for the preceding five full fiscal years of Directors established and adopted charters for each of its Audit, Compensation and Nominating and Corporate Governance Committees. Each committee is comprised of three (3) independent directors. A copy of each of these charters is available on our website at ~~www.suncommunities.com~~ ~~under~~ the heading “Investor Relations”, “Officers and Directors” and subheading “Governance Documents” and is also available in print to any stockholder upon written request addressed to Investor Relations, Sun Communities, Inc., 27777 Franklin Road, Suite 200, Southfield, Michigan 48034.proposed director candidate;

~~Our~~A description of the qualifications and background of the proposed director candidate which addresses the minimum qualifications and other criteria for Board ~~of Directors adopted a Code of Business Conduct and Ethics, which governs business decisions made and actions taken~~membership as approved by ~~our directors, officers and employees. A copy of this code is available on our website at~~ ~~www.suncommunities.com~~ ~~under~~ the ~~heading “Investor Relations”, “Officers and Directors” and subheading “Governance Documents” and is also available in print~~Board from time to ~~any stockholder upon written request addressed to Investor Relations, Sun Communities, Inc., 27777 Franklin Road, Suite 200, Southfield, Michigan 48034.~~time;

~~Our Board~~A description of ~~Directors adopted Corporate Governance Guidelines,~~all arrangements or understandings between the shareholder and the proposed director candidate;

The consent of the proposed director candidate (1) to be named in the proxy statement relating to the Company’s annual meeting of stockholders and (2) to serve as a ~~copy of which is available on our website~~director if elected at ~~www.suncommunities.com~~ ~~under the heading “Investor Relations”, “Officers~~such annual meeting; and Directors” and subheading “Governance Documents” and is also available in print to any stockholder upon written request addressed to Investor Relations, Sun Communities, Inc., 27777 Franklin Road, Suite 200, Southfield, Michigan 48034.

Any other information regarding the proposed director candidate that is required to be included in a proxy statement filed pursuant to the rules of the SEC.

Identifying and Evaluating Nominees

The NCG Committee may solicit recommendations for director nominees from any or all of the following sources: non-management directors, executive officers, third-party search firms or any other source it deems appropriate. The NCG Committee will review and evaluate the qualifications of any proposed director candidate that it is considering or has been recommended to it by a shareholder in compliance with the NCG Committee’s procedures for that purpose, and conduct inquiries it deems appropriate into the background of these proposed director candidates. When nominating a sitting director for re-election, the NCG Committee will consider the director’s performance on the Board and the director’s qualifications in respect to the criteria set forth above. Other than circumstances in which the Company’s legally required by contract or otherwise to provide third parties with the ability to nominate directors, the NCG Committee will evaluate all proposed director candidates based on the same criteria and in substantially the same manner, with no regard to the source of the initial recommendation of the proposed director candidate.

Board of Directors

The following list identifies each incumbent director to the Board and describes each person’s principal occupation for the past five years. Each of the directors has served continuously from the date of his or her election to the present time.

~~ITEM 1A.~~Name	Age	Office
Gary A. Shiffman	54	Chairman, Chief Executive Officer, President and Director
Paul D. Lapides	54	Director
Clunet R. Lewis	62	Director
Robert H. Naftaly	71	Director
Ronald L. Piasecki	70	Director
Ted J. Simon	78	Director
Arthur A. Weiss	60	Director
Stephanie W. Bergeron	55	Director

Gary A. Shiffmanis the Chairman, Chief Executive Officer, and President, and has been an executive officer of the Company since its inception. He has been actively involved in the management, acquisition, construction and development of manufactured housing communities and has developed an extensive network of industry relationships over the past twenty years. He has overseen the acquisition, rezoning, development and marketing of numerous manufactured home expansion projects. Mr. Shiffman is also an executive officer and a director of Sun Home Services, Inc. (“Sun Home Services”) and all other corporate subsidiaries of the Company. Mr. Shiffman is also a director of Origen Financial, Inc. (OTCBB: ORGN.BB).

Paul D. Lapideshas been a director since December 1993. Mr. Lapides is Director of the Corporate Governance Center in the Michael J. Coles College of Business at Kennesaw State University, where he is an assistant professor of management and entrepreneurship. A certified public accountant, Mr. Lapides is the author or co-author of more than 100 articles and twelve books on real estate, management and directors’ responsibilities. Mr. Lapides is a director of EasyLink Services International Corporation (NASDAQ: ESIC) and a member of the Advisory Board of the National Association of Corporate Directors and served on the NACD’s Blue Ribbon Commission on Audit Committees (1999). His real estate experience includes managing a $3 billion national portfolio of income-producing real estate consisting of 42,000 multi-family units and 16 million square feet of commercial space.

Clunet R. Lewishas been a director since December 1993. From 1995 until 2000, Mr. Lewis served in various positions with Eltrax Systems, Inc., a NASDAQ National Market System company, including Secretary, General Counsel, member of the Board of Directors and Chief Financial Officer. From 1989 until 1994, Mr. Lewis served as Secretary and General Counsel of Military Communications Center, Inc., a privately held company that provided retail telecommunications services to members of the United States Armed Services. From 1990 through 1991, Mr. Lewis was Managing Director of MCC Communications, Inc., a privately held company that provided international telecommunications services to members of the United States Armed Services serving in the Persian Gulf area during the Gulf War. Prior to 1993, Mr. Lewis was a shareholder of the law firm of Jaffe, Raitt, Heuer, & Weiss, Professional Corporation (“JRH&W”).

Robert H. Naftalyhas been a director since October 2006. Mr. Naftaly is retired as President and Chief Executive Officer of PPOM, an independent operating subsidiary of Blue Cross Blue Shield of Michigan (“BCBSM”) and as Executive Vice President and Chief Operating Officer of BCBSM. Previously, Mr. Naftaly served as Vice President and General Auditor of Detroit Edison Company and was the Director of the Department of Management and Budget for the State of Michigan. He was a managing partner and founder of Geller, Naftaly, Herbach & Shapiro, a certified public accounting firm. In addition, Mr. Naftaly serves as a director of Meadowbrook Insurance Group, Inc. (NYSE:MIG) since 2002 where he is currently the Chairman of the Compensation Committee and a member of the Audit Committee, the Finance Committee and the Governance and Nominating Committee. Mr. Naftaly is a director of Walsh College, a premier non-profit institution that offers business and technology degrees and programs.

Ronald L. Piaseckihas been a director since May 1996, upon completion of the Company’s acquisition of twenty-five manufactured housing communities (the “Aspen Properties”) owned by affiliates of Aspen Enterprises, Ltd. (“Aspen”). Mr. Piasecki was a director of Aspen, which he co-founded in 1973. Prior to the Company’s acquisition of the Aspen Properties, Aspen was one of the largest privately-held developers and owners of manufactured housing communities in the U.S. In addition, Mr. Piasecki is a director of Advanced Equities Financial Corporation, a financial services firm engaged in retail and institutional securities brokerage, venture capital investment banking and financial advisory services.

Ted J. Simonhas been a director since December 1993. Since February 1999, Mr. Simon has been affiliated with Grand Sakwa Management LLC, a real estate development company located in Farmington Hills, Michigan. From 1981 until January 1999, Mr. Simon was the Vice President-Real Estate (Midwest Group) of The Great Atlantic & Pacific Tea Company, Inc. and Mr. Simon was a Vice President-Real Estate and a director of Borman’s Inc., a wholly owned subsidiary of The Great Atlantic & Pacific Tea Company, Inc. Mr. Simon is also a director of Clarkston State Bank, a wholly-owned subsidiary of Clarkston Financial Corporation (OTC BB: CKSB.OB).

Arthur A. Weisshas been a director since October 1996. Since 1976, Mr. Weiss has practiced law with the law firm of JRH&W, which represents the Company in various matters. Mr. Weiss is currently Chairman of the Board of Directors and a shareholder of JRH&W. Mr. Weiss is a director of several closely-held companies in the real estate industry. Mr. Weiss is also a director and officer of a number of closely held public and private nonprofit corporations, which include the Jewish Federation of Metropolitan Detroit and the Detroit Symphony Orchestra, where he is on the executive committee, vice-president and a board member.

Stephanie W. Bergeronhas been a director since May 2007. Ms. Bergeron also serves as the President and Chief Executive Officer of Walsh College. Additionally, Ms. Bergeron serves as President and Chief Executive Officer of Bluepoint Partners, LLC, a firm providing financial consulting services. From December 1998 to December 2003, Ms. Bergeron served as Vice President and Treasurer and then Senior Vice President-Corporate Financial Operations of The Goodyear Tire & Rubber Company (“Goodyear”). Prior to joining Goodyear, Ms. Bergeron was a Vice President and Assistant Treasurer of DaimlerChrysler Corporation.

To the best of the Company’s knowledge, there are no material proceedings to which any nominee is a party, or has a material interest, adverse to the Company. To the best of the Company’s knowledge, there have been no events under any bankruptcy act, no criminal proceedings and no judgments or injunctions that are material to the evaluation of the ability or integrity of any nominee during the past five years.

Executive Officers

The persons listed below are the executive officers of the Company who served during the last completed fiscal year. Each is appointed by, and serves at the pleasure of, the Board.

Name	Age	Office
Gary A. Shiffman	54	Chairman, Chief Executive Officer, and President
Karen J. Dearing	44	Executive Vice President, Treasurer, Chief Financial Officer and Secretary
John B. McLaren	38	Executive Vice President and Chief Operating Officer
Jonathan M. Colman	53	Executive Vice President
Jeffrey P. Jorissen	64	Former Executive Vice President, Treasurer, Chief Financial Officer and Secretary
Brian W. Fannon	60	Former Executive Vice President and Chief Operating Officer and President

Background information for Gary A. Shiffman is provided above. Background information for the other five current and former executive officers is set forth below.

Karen J. Dearingjoined the Company in October 1998 as the Director of Finance where she worked extensively with accounting and finance matters related to the Company’s ground up developments and expansions. Ms. Dearing became the Company’s Corporate Controller in 2002, a Senior Vice President in 2006, and Executive Vice President and Chief Financial Officer in February 2008. She was responsible for the overall management of the Company’s accounting and finance departments and all internal and external financial reporting. Prior to working for the Company, Ms. Dearing had eight years of experience as the Financial Controller of a privately-owned automotive supplier specializing in critical automotive fasteners and five years experience as a Certified Public Accountant with Deloitte & Touche.

John B. McLarenbrings thirteen years of manufactured housing industry experience, more than five of which were served in various roles at the Company. Prior to his appointment as Executive Vice President and Chief Operating Officer in February 2008, Mr. McLaren served, since August 2005, as Senior Vice President of Sun Homes Services with overall responsibility for homes sales and leasing. Prior to that, Mr. McLaren was a Regional Vice President for Apartment Investment & Management Company (“AIMCO”), a Real Estate Investment Trust engaged in leasing apartments. Prior to AIMCO, Mr. McLaren spent approximately three years as Vice President of Leasing & Service for Sun Home Services with responsibility for developing and leading the Company’s rental home program.

Jonathan M. Colmanjoined the Company in 1994 as Vice President-Acquisitions and became a Senior Vice President in 1995 and an Executive Vice President in March 2003. A certified public accountant, Mr. Colman has over twenty years of experience in the manufactured housing community industry. He has been involved in the acquisition, financing and management of over 75 manufactured housing communities for two of the 10 largest manufactured housing community owners, including Uniprop, Inc. during its syndication of over $90 million in public limited partnerships in the late 1980s. Mr. Colman is also a Vice President of all corporate subsidiaries of the Company.

Effective February 5, 2008, as part of a management realignment and pursuant to mutual agreement between the Company and each of the respective individuals involved (a) Gary A. Shiffman relinquished the title of President of the Company, but remained as Chairman of the Board and Chief Executive Officer, (b) Brian W. Fannon relinquished the titles of Chief Operating Officer and Executive Vice President of the Company, but was appointed President of the Company; and (c) Jeffrey P. Jorissen relinquished the titles of Executive Vice President, Chief Financial Officer, Treasurer and Secretary of the Company, but remained with the Company as an advisor to senior management. Effective July 31, 2008, Mr. Fannon retired and resigned from the office of President of the Company and Gary A. Shiffman was appointed President. Biographical information for Messrs. Jorissen and Fannon is set forth below.

Jeffrey P. Jorissenhad been Chief Financial Officer, Secretary and Treasurer since December 1993 and an Executive Vice President since March 2003. As a certified public accountant, he was with the international accounting firm of Coopers & Lybrand for sixteen years, including eight years as a partner. During his tenure at Coopers & Lybrand, Mr. Jorissen specialized in real estate and directed financial statement examinations of numerous public companies. Mr. Jorissen was also the Chief Financial Officer and Secretary of Sun Home Services and all other corporate subsidiaries of the Company. Mr. Jorissen now serves as an advisor to senior management.

Brian W. Fannonjoined the Company in May 1994 as Senior Vice President-Operations and became Chief Operating Officer in 1995 and an Executive Vice President in March 2003. Prior to joining the Company, he worked for Lautrec, Ltd., then the largest manufactured housing community owner-operator in the United States, where he was responsible for operations comprising 25,000 sites and 300 employees, and Quality Homes, Inc., its sales and marketing division. He joined that organization in 1978 as a regional manager and became President in 1986. Mr. Fannon was appointed by Governor Milliken to the Michigan Mobile Home Commission in 1977, the year of its inception. Subsequent appointments by Governors Blanchard and Engler have enabled Mr. Fannon to serve on such commission, including serving as its chairman from 1986 to 1994. In 2002, Mr. Fannon was elected to the Board of Directors of the Manufactured Housing Institute and Mr. Fannon was elected to the RV/MH Hall of Fame in 2003. Mr. Fannon was also the Chief Executive Officer of Sun Home Services and a Vice President of all other corporate subsidiaries of the Company.

To the best of the Company’s knowledge, there have been no events under any bankruptcy act, no criminal proceedings and no judgments or injunctions that are material to the evaluation of the ability or integrity of any executive officer during the past five years.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act, requires the Company’s directors, executive officers and beneficial owners of more than 10% of the Company’s capital stock to file reports of ownership and changes of ownership with the SEC and the New York Stock Exchange. Based solely on its review of the copies of such reports received by it, and written representations from certain reporting persons, the Company believes, that, during the year ended December 31, 2008, its directors, executive officers and beneficial owners of more than 10% of the Company’s Common Stock have complied with all filing requirements applicable to them, except that Mr. Jorissen failed to timely file one report disclosing his disposition of 1,848 shares of Common Stock of the Company and Mr. Fannon failed to timely file one report disclosing disposition of 5,159 shares of Common Stock that were retained by the Company to satisfy Mr. Fannon’s withholding obligations

Item 11

~~RISK FACTORS~~Executive Compensation

~~Risk Factors~~ Compensation Discussion and Analysis

Compensation Committee Composition and Charter

~~Our prospects are subject~~

The Compensation Committee assists the Board in fulfilling its responsibilities for determining the compensation offered to certain uncertainties and risks. Our future results could differ materially from current results, and our actual results could differ materially from those projected in forward-looking statements as a result of certain risk factors. These risk factors include, but are not limited to, those set forth below,the Company’s executive officers. The Compensation Committee, among other one-time events, and important factors disclosed previously and from time to time in other Company filings with the Securities and Exchange Commission. This report contains certain forward-looking statements.functions:

consults with executive management in developing a compensation philosophy;

evaluates and approves compensation for the Company’s Chief Executive Officer and other executive officers; and

oversees and administers the Company’s cash and equity incentive plans.

~~Real Estate Risks~~The Compensation Committee has the authority to retain and terminate independent, third-party compensation consultants and to obtain independent advice and assistance from internal and external legal, accounting and other advisors. Each member of the Compensation Committee is independent under NYSE rules. A copy of the Compensation Committee Charter is available under the “Investor Relations-Officers and Directors” section of the Company’s website atwww.suncommunities.com.

Compensation Philosophy and Objectives

~~General~~

The goals and objectives of the Company’s executive compensation program are to attract and retain a skilled executive team to manage, lead and direct the Company’s personnel and capital to obtain the best possible economic ~~conditions and~~results given the ~~concentration of our properties~~severely depressed cycle in ~~Michigan, Florida, and Indiana may affect our ability to generate sufficient revenue.~~the manufactured housing industry.

The ~~market~~executive compensation program supports the Company’s commitment to providing superior shareholder value. This program is designed to:

attract, retain and ~~economic conditions~~reward executives who have the motivation, experience and skills necessary to lead the Company effectively and encourage them to make career commitments to the Company;

base executive compensation levels on the overall financial and operational performance of the Company and the individual contribution of an executive officer to the success of the Company;

create a link between the performance of the Company’s stock and executive compensation; and

position executive compensation levels to be competitive with other similarly situated public companies including the real estate industry in ~~our current markets~~general and manufactured housing REITs in particular.

Annual salary and bonuses are intended to be competitive in the marketplace to attract and retain executives. Stock options and restricted stock awards are intended to provide longer-term motivation which has the effect of linking stock price performance to executive compensation. Restricted stock is also intended to provide post-retirement financial security in lieu of other forms of more costly supplemental retirement programs. The Company has not implemented any policies related to stock ownership guidelines for its executive management or for members of the Company’s Board of Directors.

Role of Executive Officers in Compensation Decisions

The Compensation Committee makes all decisions regarding the compensation of executive officers, including cash-based and equity-based incentive compensation programs. The Compensation Committee reviews the performance, and determines the bonus compensation, of the Chief Executive Officer. The Compensation Committee and the Chief Executive Officer annually review the performance of the other executive officers. The conclusions reached and recommendations based on the reviews of the other executive officers, including with respect to bonuses and annual award amounts, are presented by the Chief Executive Officer to the Compensation Committee, which can exercise its discretion in modifying any recommended bonuses or awards.

Compensation Components and Processes

In order to implement the Company’s executive compensation philosophy, the Compensation Committee exercises its independent discretion in reviewing and approving the executive compensation program as a whole, as well as specific compensation levels for each executive officer. Final aggregate compensation determinations for each fiscal year are generally ~~and specifically in metropolitan areas~~made after the end of ~~our current markets, may significantly affect manufactured home occupancy or rental rates. Occupancy and rental rates, in turn, may significantly affect our revenues, and~~the fiscal year, after financial statements for such year become available. At that time, the Compensation Committee determines bonuses, if our communities do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flow and ability to pay or refinance our debt obligations could be adversely affected. We derived significant amounts of rental incomeany, for the ~~period ended December 31, 2006 from properties located~~past year’s performance, sets base salaries for those executive officers that are not bound by employment agreements for the following fiscal year and makes awards of equity-based compensation, if any. In addition, the Compensation Committee bases its decisions on the most recent publicly available compensation data for senior executive officers of comparable REITs, as well as various compensation studies and surveys, to ensure that compensation packages are in ~~Michigan, Florida,~~line with the Company’s peer group and ~~Indiana. As of December 31, 2006, 47 of our 136 Properties, or approximately 30% of developed sites, are located~~the real estate industry in ~~Michigan, 19 Properties, or approximately 21% of developed sites, are located~~general. While comparative market data is a valuable tool to assist the Compensation Committee in ~~Florida,~~setting reasonable and ~~18 Properties, or approximately 14% of developed sites, are located in Indiana. As a result~~fair compensation for the Company’s executive officers, the stated philosophy of the ~~geographic concentration of our Properties in Michigan, Florida, and Indiana, we are exposed~~Company’s executive compensation program is to recognize individual contributions to the ~~risks~~performance of ~~downturns~~the Company and to create a link between the Company’s financial performance and executive compensation.

The key components of executive officer compensation are salary, bonuses, restricted stock awards and stock option grants. Salary is generally based on factors such as an individual officer’s level of responsibility, prior years’ compensation, comparison to compensation of other officers in the ~~local economy or other local~~Company, and compensation provided at competitive companies and companies of similar size. Cash bonuses, restricted stock awards and stock option awards are intended to reward exceptional performance by the individual executive officer and the Company. Benchmarks for determining bonus levels include individual performance, Company performance against budget and growth in funds from operations (“FFO”), in each case as measured against targets established by the Compensation Committee. FFO is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company’s operating performance. Management generally considers FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding gains and losses related to sales of previously depreciated operating real estate ~~market conditions which could adversely affect~~assets and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates and ~~property values~~operating costs, providing perspective not readily apparent from net income. The Compensation Committee, in its sole discretion, may make adjustments to the NAREIT definition of ~~properties~~FFO in ~~these markets.~~determining FFO performance targets and achievement.

Stock options grants that were outstanding as of December 31, 2008 were awarded in 1998, 1999 and 2001. Stock option grants are valued on the date of grant. Stock option grants vest ratably over three years from the date of grant and expire on the tenth anniversary of the date of grant. As stock options can be fully exercised after three years, they represent a medium-term incentive, the value of which is directly aligned with the achievement of enhanced value for shareholders. Stock options are issued at the market price of the stock on the date of grant except that the options issued in 2001 were granted at 85% of the market price. This differential has been amortized as expense. All of the unexercised options issued to executives in prior years are currently “out of the money” due to the current market value of the Company’s stock. In addition, options to acquire 45,000 shares of common stock awarded to the named executives in 1998 expired unexercised in January of 2008.

Restricted stock awards that are currently outstanding were awarded in 1998, 2001, 2002, 2004 and 2008. Restricted stock awards generally begin to vest after three to four years from the date of grant and then vest over the following six to nine years. The Company’s executive officers (as well as the Company’s employees that receive restricted stock awards) receive dividends on the restricted stock awards that have been granted to date, including restricted stock awards that have not vested. The Company believes that restricted stock awards represent a long-term incentive to key executives to remain committed to the Company and its objectives. The Company has not awarded any restricted stock to executives since 2008 but may find it necessary to award such shares in the future particularly due to the need to attract and retain talented executives. Restricted stock awards encourage the development of a longer term view and strategy for the growth and success of the Company’s business along with providing motivation for a long term commitment to the Company by its executives.

Employment Agreements

Gary A. Shiffman

In 2005, the Company entered into an employment agreement with Gary A. Shiffman pursuant to which Mr. Shiffman serves as Chief Executive Officer of the Company. Mr. Shiffman’s employment agreement is for an initial term ending December 31, 2011 and is automatically renewable for successive one year terms thereafter unless either party timely terminates the agreement. Pursuant to this employment agreement, Mr. Shiffman is paid an annual base salary of $545,000, which will be increased by an annual cost of living adjustment beginning with calendar year 2006. In addition to his base salary and in accordance with the terms of his employment agreement, Mr. Shiffman is entitled to annual incentive compensation of up to 75% of his then current base salary if he satisfies certain individual and Company performance criteria established from time to time by the Board and Mr. Shiffman is entitled to annual incentive compensation of up to 25% of his then current base salary in the sole discretion of the Compensation Committee. The non-competition clauses of Mr. Shiffman’s employment agreement preclude him from engaging, directly or indirectly: (a) in the real estate business or any ancillary business of the Company during the period he is employed by the Company; and (b) in the manufactured housing community business or any ancillary business of the Company for a period of eighteen months following the period he is employed by the Company. However, Mr. Shiffman’s employment agreement does allow him to make passive investments relating to real estate in general or the housing industry in particular (other than in manufactured housing communities) during the period he is employed by the Company.

A copy of Mr.Shiffman’s employment agreement is attached as an exhibit to the Company’s periodic filings under the Exchange Act.

Karen J. Dearing

On February 5, 2008 (the “Effective Date”), the Company entered into an employment agreement with Karen J. Dearing pursuant to which Ms. Dearing serves as Executive Vice President, Treasurer, Chief Financial Officer and Secretary of the Company. Ms. Dearing’s employment agreement is for an initial term commencing on February 5, 2008 and ending on December 31, 2010. The employment agreement is automatically renewable for successive one year terms thereafter unless either party timely terminates the agreement. Pursuant to the employment agreement, Ms. Dearing is paid an annual base salary of $245,000 in the first year, $265,000 in the second year and $290,000 thereafter, subject to adjustments in accordance with the annual cost of living. In addition to her base salary and in accordance with the terms of her employment agreement, Ms. Dearing is eligible for annual incentive compensation of up to 50% of her base salary if certain annual individual and/or Company performance criteria, as established by the Compensation Committee in its sole discretion, are met and up to 50% of her base salary at the sole discretion of the Compensation Committee. In connection with the execution of the employment agreement, and pursuant to a restricted stock award agreement, the Company issued Ms. Dearing 10,000 restricted shares of the Company’s common stock. Thirty-five percent (35%) of the shares will vest on the fourth anniversary date of the Effective Date, thirty five percent (35%) on the fifth anniversary date, twenty percent (20%) on the sixth anniversary date, five percent (5%) on the seventh anniversary date and the remainder shall vest on the tenth anniversary of the Effective Date.

A copy of Ms.Dearing’s employment agreement is attached as an exhibit to the Company’s periodic filings under the Exchange Act.

John B. McLaren

On the Effective Date, the Company entered into an employment agreement with John B. McLaren pursuant to which Mr. McLaren serves as Executive Vice President and Chief Operating Officer of the Company. Mr. McLaren’s employment agreement is for an initial term commencing on February 5, 2008 and ending on December 31, 2010. The employment agreement is automatically renewable for successive one year terms thereafter unless either party timely terminates the agreement. Pursuant to the employment agreement, Mr. McLaren is paid an annual base salary of $265,000, which will be increased by an annual cost of living adjustment beginning with calendar year 2009. In addition to his base salary and in accordance with the terms of his employment agreement, Mr. McLaren is eligible for annual incentive compensation of up to 50% of his base salary if certain annual individual and/or Company performance criteria, as established by the Compensation Committee in its sole discretion, are met and up to 50% of his base salary at the sole discretion of the Compensation Committee. In connection with the execution of the employment agreement, and pursuant to a restricted stock award agreement, the Company issued Mr. McLaren 10,000 restricted shares of the Company’s common stock. Thirty-five percent (35%) of the shares will vest on the fourth anniversary date of the Effective Date, thirty five percent (35%) on the fifth anniversary date, twenty percent (20%) on the sixth anniversary date, five percent (5%) on the seventh anniversary date and the remainder shall vest on the tenth anniversary of the Effective Date.

A copy of Mr.McLaren’s employment agreement is attached as an exhibit to the Company’s periodic filings under the Exchange Act.

Jeffrey P. Jorissen

In 2005, the Company entered into an employment agreement with Jeffrey P. Jorissen pursuant to which Mr. Jorissen served as Chief Financial Officer of the Company. Mr. Jorissen’s employment agreement is for an initial term ending December 31, 2010 and is automatically renewable for successive one year terms thereafter unless either party timely terminates the agreement. Mr. Jorissen’s employment agreement was amended in 2008, in connection with the management realignment discussed above to reflect his new title and role with the Company. Pursuant to this employment agreement, Mr. Jorissen is paid an annual base salary of $314,325, which will be increased by an annual cost of living adjustment beginning with calendar year 2006. In addition to his base salary and in accordance with the terms of his employment agreement, Mr. Jorissen is entitled to annual incentive compensation of up to 75% of his then current base salary if he satisfies certain individual and Company performance criteria established from time to time by the Board and Mr. Jorissen is entitled to annual incentive compensation of up to 25% of his then current base salary in the sole discretion of the Compensation Committee. The non-competition clauses of Mr. Jorissen’s employment agreement preclude him from engaging, directly or indirectly, in the real estate business or any ancillary business of the Company during the period he is employed by the Company and for a period of eighteen months thereafter.

A copy of Mr.Jorissen’s employment agreement is attached as an exhibit to the Company’s periodic filings under the Exchange Act.

Brian W. Fannon

In 2005, the Company entered into an employment agreement with Brian W. Fannon pursuant to which Mr. Fannon served as Chief Operating Officer of the Company. In February 2008, Mr. Fannon agreed to step into the role of President, and to no longer serve as Chief Operating Officer, in connection with the management realignment discussed above. The Company entered into that certain Retirement from Employment and Release agreement with Brian W. Fannon dated July 10, 2008 and effective as of July 31, 2008, which made certain changes to Mr. Fannon’s existing employment agreement (the “Retirement Agreement”).

Under the Retirement Agreement, effective July 31, 2008, Mr. Fannon’s employment with the Company and/or any of its subsidiaries, including any service as a director or officer of such entities, was terminated in its entirety. Further, all of Mr. Fannon’s stock options and other stock based compensation awarded to Mr. Fannon that was outstanding as of July 10, 2008, became fully vested and immediately exercisable on that date. Under the Retirement Agreement, Mr. Fannon is entitled to receive compensation in an amount equal to one-twelfth (1/12) of the Base Salary (as defined in his existing employment agreement) on the first day of each month for the nine (9) months following his last day of employment, with the first payment beginning on August 1, 2008 and the last payment ending on April 1, 2009, subject to certain conditions.

The non-competition clauses of Mr. Fannon’s employment agreement precluded him from engaging, directly or indirectly, in the real estate business or any ancillary business of the Company during the period he is employed by the Company and for a period of between twelve and twenty-four months thereafter. Pursuant to the Retirement Agreement, Mr. Fannon’s obligation to refrain from engaging in the real estate business or any ancillary business of the Company shall end on April 30, 2009.

A copy of Mr.Fannon’s employment agreement and Retirement Agreement is attached as an exhibit to the Company’s periodic filings under the Exchange Act.

2008 Compensation

The ~~following factors, among others, may adversely affect the revenues generated by our communities:~~

~~the national and local economic climate which may be adversely impacted by, among other factors, plant closings and industry slowdowns;~~

~~local real estate market conditions such as the oversupply of manufactured housing sites or a reduction in demand for manufactured housing sites in an area;~~

~~the number of repossessed homes in a particular market;~~

~~the lack of an established dealer network;~~

~~the rental market which may limit the extent to which rents may be increased to meet increased expenses without decreasing occupancy rates;~~

~~the perceptions by prospective tenants of the safety, convenience and attractiveness of the Properties and the neighborhoods where they are located;~~

~~zoning or other regulatory restrictions;~~

~~competition from other available manufactured housing sites and alternative forms of housing (such as apartment buildings and site-built single-family homes);~~

~~our ability to provide adequate management, maintenance and insurance;~~

~~increased operating costs, including insurance premiums, real estate taxes and utilities; or~~

~~the enactment of rent control laws or laws taxing the owners of manufactured homes.~~

Our income would also be adversely affected if tenants were unable to pay rent or if sites were unable to be rented on favorable terms. If we were unable to promptly relet or renew the leases for a significant number of the sites, or if the rental rates upon such renewal or reletting were significantly lower than expected rates, then our business and results of operations could be adversely affected. In addition, certain expenditures associated with each equity investment (such as real estate taxes and maintenance costs) generally are not reduced when circumstances cause a reduction in income from the investment. Furthermore, real estate investments are relatively illiquid and, therefore, will tend to limit our ability to vary our portfolio promptly in response to changes in economic or other conditions.

~~Competition affects occupancy levels and rents which could adversely affect our revenues.~~

All of our Properties are located in developed areas that include other manufactured housing community properties. The number of competitive manufactured housing community properties in a particular area could have a material adverse effect on our ability to lease sites and increase rents charged at our Properties or at any newly acquired properties. We may be competing with others with greater resources and whose officers and directors have more experience than our officers and directors. In addition, other forms of multi-family residential properties, such as private and federally funded or assisted multi-family housing projects and single-family housing, provide housing alternatives to potential tenants of manufactured housing communities.

~~Our ability to sell or lease manufactured homes may be affected by various factors, which may in turn adversely affect our profitability.~~

~~SHS is in the manufactured home market offering manufactured home sales and leasing services to tenants and prospective tenants of our communities. The market~~base salaries for the ~~sale~~current and ~~lease of manufactured homes may be adversely affected by~~former named executive officers for the ~~following factors:~~

~~downturns~~year ended December 31, 2008, were paid in ~~economic conditions which adversely impact the housing market;~~

~~an oversupply of,~~accordance with existing employment agreements or ~~a reduced demand for, manufactured homes;~~

~~the difficulty facing potential purchasers in obtaining affordable financing as a result of heightened lending criteria; and~~

~~an increase or decrease in the rate of manufactured home repossessions which provide aggressively priced competition to new manufactured home sales.~~

~~Any of the above listed factors could adversely impact our rate of manufactured home sales and leases, which would result in a decrease in profitability.~~

~~Increases in taxes and regulatory compliance costs may reduce our revenue.~~

Costs resulting from changes in real estate laws, income taxes, service or other taxes, generally are not passed through to tenants under leases and may adversely affect our funds from operations and our ability to pay or refinance our debt. Similarly, changes in laws increasing the potential liability for environmental conditions existing on properties or increasing the restrictions on discharges or other conditions may result in significant unanticipated expenditures, which would adversely affect our business and results of operations.

~~We may not be able to integrate or finance our development activities.~~

From time to time, we engage in the construction and development of new communities, and may continue to engage in the development and construction business in the future. Our development and construction business may be exposed to the following risks which are in addition to those risks associatedarrangements with the ~~ownership and operation of established manufactured housing communities:~~

~~we may not be able to obtain financing with favorable terms for community development which may make us unable to proceed with the development;~~

we may be unable to obtain, or face delays in obtaining, necessary zoning, building and other governmental permits and authorizations, which could result in increased costs and delays, and even require us to abandon development of the community entirely if we are unable to obtain such permits or authorizations;

~~we may abandon development opportunities that we have already begun to explore and as a result we may not recover expenses already incurred in connection with exploring such development opportunities;~~

~~we may be unable to complete construction and lease-up of a community on schedule resulting in increased debt service expense and construction costs;~~

we may incur construction and development costs for a community which exceed our original estimates due to increased materials, labor or other costs, which could make completion of the community uneconomical and we may not be able to increase rents to compensate for the increase in development costs which may impact our profitability;

~~we may be unable to secure long-term financing on completion of development resulting in increased debt service and lower profitability; and~~

~~occupancy rates and rents at a newly developed community may fluctuate depending on several factors, including market and economic conditions, which may result in the community not being profitable.~~

~~If any of the above occurred, our business and results of operations could be adversely affected.~~

~~We may not be able to integrate or finance our acquisitions and our acquisitions may not perform as expected.~~

~~We acquire and intend to continue to acquire manufactured housing communities on a select basis. Our acquisition activities and their success are subject to the following risks:~~

we may be unable to acquire a desired property because of competition from other well capitalized real estate investors, including both publicly traded real estate investment trusts and institutional investment funds;

even if we enter into an acquisition agreement for a property, it is usually subject to customary conditions to closing, including completion of due diligence investigations to our satisfaction, which may not be satisfied;

~~even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price;~~

~~we may be unable to finance acquisitions on favorable terms;~~

~~acquired properties may fail to perform as expected;~~

acquired properties may be located in new markets where we face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area and unfamiliarity with local governmental and permitting procedures; and

~~we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations.~~

~~If any of the above occurred, our business and results of operations could be adversely affected.~~Company.

In addition ~~we may acquire properties subject~~ to ~~liabilities~~their base salaries, the current and ~~without any recourse, or with only limited recourse, with respect to unknown liabilities. As a result, if a liability were to be asserted against us based upon ownership~~former named executive officers earned, in the aggregate, bonuses of ~~those properties, we might have to pay substantial sums to settle it, which could adversely affect our cash flow.~~

~~Rent control legislation may harm our ability to increase rents.~~

State and local rent control laws in certain jurisdictions may limit our ability to increase rents and to recover increases in operating expenses and the costs of capital improvements. Enactment of such laws has been considered from time to time in other jurisdictions. Certain Properties are located, and we may purchase additional properties, in markets that are either subject to rent control or in which rent-limiting legislation exists or may be enacted.

~~We may be subject to environmental liability.~~

~~Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate is liable~~$534,343 for the costs of removal or remediation of certain hazardous substances at, on, under or in such property. Such laws often impose such liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous substances. The presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner’s ability to sell or rent such property, to borrow using such property as collateral or to develop such property. Persons who arrange for the disposal or treatment of hazardous substances also may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility owned or operated by another person. In addition, certain environmental laws impose liability for the management and disposal of asbestos-containing materials and for the release of such materials into the air. These laws may provide for third parties to seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials. In connection with the ownership, operation, management, and development of real properties, we may be considered an owner or operator of such properties and, therefore, are potentially liable for removal or remediation costs, and also may be liable for governmental fines and injuries to persons and property. When we arrange for the treatment or disposal of hazardous substances at landfills or other facilities owned by other persons, we may be liable for the removal or remediation costs at such facilities.

All of the Properties have been subject to a Phase I or similar environmental audit (which involves general inspections without soil sampling or ground water analysis) completed by independent environmental consultants. These environmental audits have not revealed any significant environmental liability that would have a material adverse effect on our business. These audits cannot reflect conditions arising after the studies were completed, and no assurances can be given that existing environmental studies reveal all environmental liabilities, that any prior owner or operator of a property or neighboring owner or operator did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to any one or more Properties.

~~Losses in excess of our insurance coverage or uninsured losses could adversely affect our cash flow.~~

We maintain comprehensive liability, fire, flood (where appropriate), extended coverage, and rental loss insurance on the Properties with policy specifications, limits, and deductibles which are customarily carried for similar properties. As a result of market conditions in the insurance industry, we carry a $250,000 deductible on our liability insurance. Certain types of losses, however, may be either uninsurable or not economically insurable, such as losses due to earthquakes, riots, or acts of war. In the event an uninsured loss occurs, we could lose both our investment in and anticipated profits and cash flow from the affected property. Any loss would adversely affect our ability to repay our debt.

~~Financing and Investment Risks~~

~~Our significant amount of debt could limit our operational flexibility or otherwise adversely affect our financial condition.~~

We have a significant amount of debt. As of December 31, 2006, we had approximately $1.2 billion of total debt outstanding, consisting of approximately $1.0 billion in debt that is collateralized by mortgage liens on 102 of the Properties (the “Mortgage Debt”), and

approximately $140.3 million in unsecured debt. If we fail to meet our obligations under the Mortgage Debt, the lender would be entitled to foreclose on all or some of the Properties securing such debt which could have a material adverse effect on us and our ability to make expected distributions, and could threaten our continued viability.

~~We are subject to the risks normally associated with debt financing, including the following risks:~~

our cash flow may be insufficient to meet required payments of principal and interest, or require us to dedicate a substantial portion of our cash flow to pay our debt and the interest associated with our debt rather than to other areas of our business;

~~our existing indebtedness may limit our operating flexibility due to financial and other restrictive covenants, including restrictions on incurring additional debt;~~

~~it may be more difficult for us to obtain additional financing in the future for our operations, working capital requirements, capital expenditures, debt service or other general requirements;~~

~~we may be more vulnerable in the event of adverse economic and industry conditions or a downturn in our business; and~~

~~we may be placed at a competitive disadvantage compared to our competitors that have less debt.~~

~~If any of the above risks occurred, our financial condition and results of operations could be materially adversely affected.~~

~~We may be able to incur substantially more debt which would increase the risks associated with our substantial leverage.~~

Despite our current indebtedness levels, we may still be able to incur substantially more debt in the future. If new debt is added to our current debt levels, an even greater portion of our cash flow will be needed to satisfy our debt service obligations. As a result, the related risks that we now face could intensify and increase the risk of a default on our indebtedness.

~~Our equity investment in Origen Financial, Inc., may subject us to certain risks.~~

In October 2003, Origen Financial, LLC completed a $150 million recapitalization. In this transaction, we purchased 5,000,000 shares of common stock (representing approximately 20% of the issued and outstanding shares of common stock as of December 31, 2006) of Origen Financial, Inc. (“Origen”) for $50 million. Origen is a publicly traded real estate investment trust in the business of originating, acquiring and servicing manufactured home loans. Our equity investment in Origen is subject to all of the risks associated with Origen’s business, including the risks associated with the manufactured housing finance industry. The failure of Origen to achieve its development and operating goals could have a material adverse effect on the value of our investment in Origen. At December 31, 2006, the Company determined that an impairment to its investment in Origen had occurred and recorded an $18.0 million adjustment to the carrying value of this investment. Additional information is included in Footnote 1.g. to our consolidated financial statements included herein.

~~The financial condition and solvency of our borrowers and the market value of our properties may adversely affect our investments in real estate, installment and other loans.~~

As of December 31, 2006, we had an investment of approximately $13.5 million in a real estate loan to an entity which owns a manufactured home community located in Arizona. The loan was secured by a first lien on the underlying property and was repaid in full on March 1, 2007. Also, as of December 31, 2006, we had outstanding approximately $20.5 million in installment loans to owners of manufactured homes. These installment loans are collateralized by the manufactured homes. We may invest in additional mortgages and installment loans in the future. By virtue of our investment in the mortgages and the loans, we are subject to the following risks of such investment:

~~the borrowers may not be able to make debt service payments or pay principal when due;~~

~~the value of property securing the mortgages and loans may be less than the amounts owed; and~~

~~interest rates payable on the mortgages and loans may be lower than our cost of funds.~~

~~If any of the above occurred, our business and results of operations could be adversely affected.~~

~~Tax Risks~~

~~We may suffer adverse tax consequences and be unable to attract capital if we fail to qualify as a REIT.~~

~~We believe that since our taxable~~ year ended December 31, ~~1994, we~~2008. Although bonuses were earned for the year ended December 31, 2008, such bonuses were not paid until March of 2009. Each named executive officer or former executive officer is entitled, under the terms of their employment agreements with the Company (in the case of Messrs. Shiffman and Jorissen), to receive a bonus of up to 75% of his base salary, in the sole discretion of the Compensation Committee, if certain annual individual and Company performance criteria, as established by the Compensation Committee, are met and up to 25% of his base salary at the sole discretion of the Compensation Committee. In the case of Mr. McLaren and Ms. Dearing, each named executive officer is entitled, under the terms of their employment agreements with the Company, to receive a bonus of up to 50% of his or her base salary, subject to the discretion of the Compensation Committee, if certain annual individual and/or Company performance criteria, as established by the Compensation Committee, are met and up to 50% of his or her base salary at the sole discretion of the Compensation Committee. In the case of Mr. Colman, who does not have an employment agreement with the Company, an annual bonus may be awarded up to 50% of his base salary if certain annual individual and Company performance criteria are met, as established by the Chief Executive Officer and approved by the Compensation Committee, and up to 50% of his base salary at the sole discretion of the Compensation Committee.

After review of the individual performance of each executive and former executive officer in relation to the agreed upon individual and Company performance objectives , the achievement of Adjusted FFO⁽¹⁾ growth of 2.9 percent in relation to the agreed to FFO growth objective of three to five percent, the performance of the Company in relation to budgeted revenue producing site and net operating income targets and the overall performance of the Company during the year and in relation to the manufactured housing industry in general, the Compensation Committee determined that certain individual and/or Company performance objectives were met and that the efforts of the current and former named executive officers were substantial in relation to the achievement of the Company results. Based on such analysis, the Compensation Committee awarded the following bonuses:

	Percentage of Base Salary Awarded for Achievement of Individual and/or Corporate Performance Objectives		Discretionary Percentage of Base Salary Awarded		Bonus
Gary A. Shiffman	25.00	%	15.00	%	$	239,260
Karen J. Dearing	25.00	%	10.00	%	$	85,750
John B. McLaren	4.50	%	25.00	%	$	78,175
Jonathan M. Colman	25.00	%	0.00	%	$	44,888
Jeffrey P. Jorissen	25.00	%	0.00	%	$	86,250

⁽¹⁾

Adjusted FFO was determined by excluding the effect of certain equity losses and impairment charges related to the Company’s investment in Origen Financial, Inc., impairment charges related to certain real estate assets and certain other non-recurring or unusual charges as determined in the sole discretion of the Compensation Committee

In February 2008, equity incentive awards of 10,000 shares each were granted to Ms. Dearing and Mr. McLaren in conjunction with their appointment as Chief Financial Officer and Chief Operating Officer of the Company, respectively. Thirty-five percent of the shares vest on February 5, 2012 and February 5, 2013, twenty percent of the shares vest on February 5, 2014 and the remaining ten percent will vest in two equal installments on February 5, 2015 and February 5, 2018.

The performance based equity awards issued to Messer’s Shiffman, Jorissen and Fannon in 2004 were cancelled in March of 2008.

Tax and Accounting Implications

Deductibility of Executive Compensation.

Section 162(m) of the Internal Revenue Code limits the deductibility on the Company’s tax return of compensation over $1 million to any of its named executive officers. However, compensation that is paid pursuant to a plan that is performance-related, non-discretionary and has been ~~organized~~approved by the Company’s stockholders is not subject to section 162(m). The Company has such a plan and ~~operated, and intend~~may utilize it to ~~continue~~mitigate the potential impact of section 162(m). The Company did not pay any compensation during 2008 that would be subject to ~~operate, so as to qualify for taxation~~section 162(m). The Company believes that, because it qualifies as a REIT under the Internal Revenue Code ~~(“Code”). Although we believe~~and therefore is not subject to federal income taxes on its income to the extent distributed, the payment of compensation that ~~we have been and~~does not satisfy the requirements of section 162(m) will ~~continue~~not generally affect the Company’s net income. However, to ~~be organized and have operated and will continue to operate so as to~~the extent that compensation does not qualify for ~~taxation as~~deduction under section 162(m) or under short term incentive plans approved by shareholders to, among other things, mitigate the effects of section 162(m), a ~~REIT, we cannot assure you that we have been or will continue to be organized or operated in a manner to so qualify or remain so qualified. Qualification as a REIT involves the satisfaction~~larger portion of numerous requirements (some on an annual and quarterly basis) established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within our control. In addition, frequent changes occur in the area of REIT taxation, which require the Company continually to monitor its tax status.

~~If we fail to qualify as a REIT in any taxable year, we would~~shareholder distributions may be subject to federal income taxation as dividend income rather than return of capital. The Company does not believe that section 162(m) will materially affect the taxability of shareholder distributions, although no assurance can be given in this regard due to the variety of factors that affect the tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates. Moreover, unless entitled to relief under certain statutory provisions, we also would be disqualified from treatment as a REIT forposition of each shareholder. For these reasons, the four taxable years following the year during which qualification was lost. This treatment would reduce our net earnings available for investment or distribution to stockholders because of the additional tax liability to us for the years involved. In addition, distributions to stockholders would no longer be required to be made. Even if we qualify forCompensation Committee’s compensation policy and ~~maintain our REIT status, we will be subject to certain federal, state and local taxes on our property and certain of our operations.~~practices are not directly governed by section 162(m).

~~We intend for the Operating Partnership to qualify as a partnership, but we cannot guarantee that it will qualify.~~409A Considerations.

~~We believe~~The Company has also taken into consideration Internal Revenue Code Section 409A in the design and implementation of the Company’s compensation programs. If an executive is entitled to nonqualified deferred compensation benefits that are subject to Section 409A, and such benefits do not comply with Section 409A, then the ~~Operating Partnership has been organized as~~benefits are taxable in the first year they are not subject to a ~~partnership and will qualify for treatment as~~substantial risk of forfeiture. In such ~~under~~case, the ~~Code. However, if the Operating Partnership~~executive is ~~deemed~~subject to ~~be a “publicly traded partnership,” it will be treated as a corporation instead of a partnership for~~regular federal income tax, ~~purposes unless at least 90% of its income is qualifying income as defined in the Code. The income requirements applicable to REITs~~interest and the definition of “qualifying income” for purposes of this 90% test are similar in most respects. Qualifying income for the 90% test generally includes passive income, such as specified types of real property rents, dividends and interest. We believe that the Operating Partnership would meet this 90% test, but we cannot guarantee that it would. If the Operating Partnership were to be taxed as a corporation, it would incur substantial tax liabilities, we would fail to qualify as a REIT foran additional federal income tax ~~purposes, and our ability to raise additional capital could be significantly impaired.~~

~~Our ability to accumulate cash is restricted due to certain REIT distribution requirements.~~

~~In order to qualify as a REIT, we must distribute to our stockholders at least 90%~~ of our REIT taxable income (calculated without any deduction for dividends paid and excluding net capital gain) and to avoid federal income taxation, our distributions must not be less than 100% of our REIT taxable income, including capital gains. As a result20% of the ~~distribution requirements, we do not expect to accumulate significant amounts of cash. Accordingly, these distributions could significantly reduce the cash available to us~~benefit includible in ~~subsequent periods to fund our operations and future growth.~~income.

~~Business Risks~~ Director Compensation Tables

Directors of the Company who are also employees receive no additional compensation for their services as directors. During 2008, the Company paid directors that are not employees of the Company the following annual fees:

		Chairman		Member
Annual Retainer	$	—	$	50,000
Compensation Committee	$	10,000	$	5,000
Audit Committee	$	32,500	$	30,000
NCG Committee	$	10,000	$	5,000
Special Litigation Committee	$	52,877	$	—

Although Arthur A. Weiss earned director’s fees of $50,000 for services during the fiscal year ended December 31, 2008, he declined such fees (See “Certain Relationships and Related Transactions, and Director Independence-Legal Counsel”).

~~Some of our directors and officers may have conflicts of interest with respect to certain related party transactions and other business interests.~~

~~Ownership of Origen. In the 2003 recapitalization of Origen Financial, Inc., (“Origen”), the Company purchased 5,000,000 shares of Origen common stock~~The following tables provide compensation information for $50 million and Shiffman Origen LLC (which is owned by the Milton M. Shiffman Spouse’s Marital Trust, Gary A. Shiffman (the Company’s Chief Executive Officer), and members of Mr. Shiffman’s family) purchased 1,025,000 shares of Origen common stock for $10.25 million. Gary A. Shiffman is aeach member of the ~~board of directors of Origen and Arthur A. Weiss, a director of~~Board for the ~~Company, is a trustee of the Milton M. Shiffman Spouse’s Marital Trust.~~

Accordingly, in all transactions involving Origen, Mr. Shiffman and/or Mr. Weiss may have a conflict of interest with respect to their respective obligations as an officer and/or director of the Company. The following are the current transactions and agreements involving Origen which may present a conflict of interest for Mr. Shiffman or Mr. Weiss:year ended on December 31, 2008.

Origen Servicing Inc., a wholly owned subsidiary of Origen, services approximately $20.6 million of manufactured home loans for the Company as of December 31, 2006, for an annual servicing fee of 100 to 150 basis points of the outstanding principal balance of the loans pursuant to a Loan Servicing Agreement.

Origen has agreed to fund loans that meet the Company’s underwriting guidelines and then transfer those loans to the Company pursuant to a Loan Origination, Sale and Purchase Agreement. During 2006 and 2005, the Company purchased $7.9 million and $7.2 million of these loans, respectively.

Name	Fees Earned or Paid in Cash		Option Awards⁽¹⁾		Total
Paul D. Lapides	$	50,000	$	2,728	$	52,728
Clunet R. Lewis	$	145,377	$	2,728	$	148,105
Robert H. Naftaly	$	80,000	$	1,573	$	81,573
Ronald L. Piasecki	$	65,000	$	2,728	$	67,728
Ted J. Simon	$	65,000	$	2,728	$	67,728
Arthur A. Weiss	$	—	$	2,728	$	2,728
Stephanie W. Bergeron	$	80,000	$	1,573	$	81,573

The Company purchases certain repossessed manufactured houses owned by Origen located in its manufactured housing communities. The Company purchased approximately $1.2 million and $2.1 million of repossessed homes from Origen during 2006 and 2005, respectively. This program allows the Company to retain houses for resale and rent in its communities and allows Origen to enhance recoveries on its repossessed homes.

As noted above, Origen services manufactured home loans for the Company under a Loan Servicing Agreement. Certain loans may, from time to time, be sold to Origen. For loans that are made below published rates, the Company will pay Origen the interest differential between market rates and the rate paid by the borrower for any such loans sold to Origen. During 2004, the Company sold a portfolio of below published rates loans totaling $1.6 million to Origen. No sales of such loans were made in 2005 and 2006. The Company paid interest differential of approximately $0.1 million during 2006, 2005 and 2004. In addition, in the third quarter of 2006, the Company sold a portfolio of installment loans on manufactured homes totaling approximately $4.1 million to a wholly-owned subsidiary of Origen Financial, Inc. for 100.5 percent of the principal balance for loans that were 89 days or less delinquent and 100 percent of the principal balance for loans that were 90 days or more delinquent. The Company recognized a gain on the sale of these notes of $0.02 million.

~~Tax Consequences Upon Sale of Properties~~. Gary A. Shiffman holds limited partnership interests in the Operating Partnership which were received in connection with the contribution of 24 properties (four of which have been sold) from partnerships previously affiliated with him (the “Sun Partnerships”). Prior to any redemption of these limited partnership interests for our common stock, Mr. Shiffman will have tax consequences different from those of us and our public stockholders on the sale of any of the Sun Partnerships. Therefore, Mr. Shiffman and the Company may have different objectives regarding the appropriate pricing and timing of any sale of those properties.

~~Lease of Executive Offices~~. Gary A. Shiffman, together with certain family members, indirectly owns approximately a 21 percent equity interest in American Center LLC, the entity from which we lease office space for our principal executive offices. Arthur A. Weiss owns a 0.75 percent indirect interest in American Center LLC. This lease is for an initial term of five years, beginning May 1, 2003, and we have the right to extend the lease for an additional five year term. The current annual base rent under this lease is at $20.75 per square foot (gross) and increases $0.50 per square foot for each successive year of the initial term. Mr. Shiffman may have a conflict of interest with respect to his obligations as an officer and/or director of the Company and his ownership interest in American Center LLC.

~~We rely on key management~~.

We are dependent on the efforts of our executive officers, particularly Gary A. Shiffman, Jeffrey P. Jorissen, Brian W. Fannon and Jonathan M. Colman (together, the “Senior Officers”). As disclosed under “Legal Proceedings,” the SEC has initiated civil action against three of our employees, including Messrs. Shiffman and Jorissen, with respect to our accounting of the SunChamp LLC, (“SunChamp”), investment during 2000, 2001 and 2002. The defense of this civil action may divert the time and attention of these employees, be costly to the Company and/or result in the loss of services, or change in duties, of one or more of these employees. The loss of services of one or more of our executive officers could have a temporary adverse effect on our operations. We do not currently maintain or contemplate obtaining any “key-man” life insurance on the Senior Officers.

~~Certain provisions in our governing documents may make it difficult for a third-party to acquire us.~~

~~9.8% Ownership Limit~~. In order to qualify and maintain our qualification as a REIT, not more than 50% of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer individuals. Thus, ownership of more than 9.8% of our outstanding shares of common stock by any single stockholder has been restricted, with certain exceptions, for the purpose of maintaining our qualification as a REIT under the Code. Such restrictions in our charter do not apply to Gary Shiffman, the Milton M. Shiffman Spouse’s Marital Trust and the Estate of Robert B. Bayer.

The 9.8% ownership limit, as well as our ability to issue additional shares of common stock or shares of other stock (which may have rights and preferences over the common stock), may discourage a change of control of the Company and may also: (1) deter tender offers for the common stock, which offers may be advantageous to stockholders; and (2) limit the opportunity for stockholders to receive a premium for their common stock that might otherwise exist if an investor were attempting to assemble a block of common stock in excess of 9.8% of the outstanding shares of the Company or otherwise effect a change of control of the Company.

~~Staggered Board.~~ Our Board of Directors has been divided into three classes of directors. The term of one class will expire each year. Directors for each class will be chosen for a three-year term upon the expiration of such class’s term, and the directors in the other two classes will continue in office. The staggered terms for directors may affect the stockholders’ ability to change control of the Company even if a change in control were in the stockholders’ interest.

~~Preferred Stock~~. Our charter authorizes the Board of Directors to issue up to 10,000,000 shares of preferred stock and to establish the preferences and rights (including the right to vote and the right to convert into shares of common stock) of any shares issued. The power to issue preferred stock could have the effect of delaying or preventing a change in control of the Company even if a change in control were in the stockholders’ interest.

~~Rights Plan~~. We adopted a stockholders’ rights plan in 1998 that provides our stockholders (other than a stockholder attempting to acquire a 15% or greater interest in the Company) with the right to purchase stock in the Company at a discount in the event any person attempts to acquire a 15% or greater interest in the Company. Because this plan could make it more expensive for a person to acquire a controlling interest in the Company, it could have the effect of delaying or preventing a change in control of the Company even if a change in control were in the stockholders’ interest.

~~Changes in our investment and financing policies may be made without stockholder approval.~~

Our investment and financing policies, and our policies with respect to certain other activities, including our growth, debt, capitalization, distributions, REIT status, and operating policies, are determined by our Board of Directors. Although the Board of Directors has no present intention to do so, these policies may be amended or revised from time to time at the discretion of the Board of Directors without notice to or a vote of our stockholders. Accordingly, stockholders may not have control over changes in our policies and changes in our policies may not fully serve the interests of all stockholders.

~~Substantial sales of our common stock could cause our stock price to fall~~.

Sales of a substantial number of shares of our common stock, or the perception that such sales could occur, could adversely affect prevailing market prices for shares. As of December 31, 2006, up to approximately 2,928,000 shares of our common stock may be issued in the future to the limited partners of the Operating Partnership in exchange for their Common or Convertible Preferred OP Units. These Preferred OP Units are convertible at prices ranging from $45 to $68. The limited partners may sell such shares pursuant to registration rights or an available exemption from registration. Also, Water Oak, Ltd., a former owner of one of the Properties, may be issued Common OP Units with a value of approximately $1,000,000 annually through 2007. In 2008 and 2009, Water Oak, Ltd. may be issued Common OP Units with a value of approximately $1,250,000. In addition, as of December 31, 2006, options to purchase 303,047 shares of our common stock were outstanding under our 1993 Employee Stock Option Plan, our 1993 Non-Employee Director Stock Option Plan and our Long-Term Incentive Plan (the “Plans”). No prediction can be made regarding the effect that future sales of shares of our common stock will have on the market price of shares.

~~An increase in interest rates may have an adverse effect on the price of our common stock.~~

One of the factors that may influence the price of our common stock in the public market will be the annual distributions to stockholders relative to the prevailing market price of the common stock. An increase in market interest rates may tend to make the common stock less attractive relative to other investments, which could adversely affect the market price of our common stock.

~~ITEM 1B.~~⁽¹⁾

~~UNRESOLVED STAFF COMMENTS~~This column represents the dollar amount recognized for financial statement reporting purposes with respect to the 2008 fiscal year for the fair value of stock options granted to each of the directors in 2008 and in prior years, in accordance with FASB Statement 123(R), Share-Based Payment (“SFAS 123(R)”). Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. These amounts reflect the Company’s accounting expense for these awards, and do not correspond to the actual value that will be recognized by the directors.

On July 13, 2006, the Company received a comment letter from the SEC with respect to its Form 10-Q for the quarter ended March 31, 2006. As noted in Item 3, Legal Proceedings, the Company has responded to the comments and has not received any further communication from the SEC on this matter.

Name	July 2008 Option Award 1,500 shares each⁽¹⁾		Aggregate number of options outstanding as of December 31, 2008
Paul D. Lapides	$	1,755	14,000
Clunet R. Lewis	$	1,755	10,500
Robert H. Naftaly	$	1,755	3,000
Ronald L Piasecki	$	1,755	10,000
Ted J. Simon	$	1,755	14,000
Arthur A. Weiss	$	1,755	14,000
Stephanie W. Bergeron	$	1,755	3,000

~~ITEM 2.~~⁽¹⁾

~~PROPERTIES~~These columns represent the grant date fair value of the stock option awards as determined in accordance with SFAS 123(R). For additional information on the valuation assumptions with respect to these grants, refer to note 6 of the Company’s financial statements in the Form 10-K for the year ended December 31, 2008, as filed with the SEC.

~~General~~. As of December 31, 2006, the Properties consisted of 124 manufactured housing communities, four recreational vehicle communities, and eight properties containing both manufactured housing and recreational vehicle sites located in eighteen states concentrated in the midwestern and southeastern United States. As of December 31, 2006, the Properties contained 47,606 developed sites comprised of 42,247 developed manufactured home sites and 5,359 recreational vehicle sites and an additional 6,813 manufactured home sites suitable for development. Most of the Properties include amenities oriented toward family and retirement living. Of the 136 Properties, 71 have more than 300 developed manufactured home sites, with the largest having 969 developed manufactured home sites.

As of December 31, 2006, the Properties had an occupancy rate of 85 percent in stabilized communities and 66 percent in development communities and the aggregate occupancy rate was 83 percent excluding recreational vehicle sites. Since January 1, 2006, the Properties have averaged an aggregate annual turnover of homes (where the home is moved out of the community) of approximately 3.3 percent and an average annual turnover of residents (where the resident-owned home is sold and remains within the community, typically without interruption of rental income) of approximately 7.7 percent.

Summary Compensation Table

The ~~average renewal rate~~following table includes information concerning compensation for ~~residents in~~ the Company’s ~~rental program was approximately 52 percent~~named executive officers for the fiscal year ended December 31, ~~2006.~~2008.

	Year	Salary			Bonus ⁽²⁾		Stock Awards ⁽³⁾		All Other Compensation ⁽⁴⁾			Total
Gary A. Shiffman, Chairman,	2008	$	598,150		$	239,260	$	572,635	$	83,594	⁽⁵⁾	$	1,493,639
Chief Executive Officer, and	2007	$	574,550		$	183,856	$	346,673	$	64,470	⁽⁶⁾	$	1,169,549
President	2006	$	531,988	⁽¹⁾	$	114,600	$	1,151,453	$	56,885	⁽⁷⁾	$	1,854,926

Karen J. Dearing, Executive Vice	2008	$	236,892		$	85,750	$	50,674	$	2,594		$	375,910
President, Treasurer, Chief
Financial Officer and Secretary

John B. McLaren, Executive Vice	2008	$	254,287		$	78,175	$	17,434	$	2,594		$	352,490
President and Chief Operating
Officer

Jonathan M. Colman, Executive	2008	$	179,550		$	44,888	$	78,736	$	2,241		$	305,415
Vice President	2007	$	172,450		$	43,113	$	124,279	$	1,945		$	341,787
	2006	$	159,645	⁽¹⁾	$	34,400	$	158,678	$	264		$	352,987

Jeffrey P. Jorissen ⁽⁸⁾, Former Executive Vice	2008	$	345,000		$	86,250	$	255,005	$	2,594		$	688,849
President, Treasurer, Chief	2007	$	331,400		$	72,908	$	187,643	$	2,526		$	594,477
Financial Officer and Secretary	2006	$	306,820	⁽¹⁾	$	66,100	$	789,787	$	264		$	1,162,971

Brian W. Fannon ⁽⁹⁾, Former Executive	2008	$	270,942		$	—	$	583,917	$	334,540		$	1,189,399
Vice President and Chief Operating	2007	$	425,600		$	93,632	$	120,704	$	2,526		$	642,462
Officer and President	2006	$	394,062	⁽¹⁾	$	84,900	$	485,137	$	264		$	964,363

⁽¹⁾

Messrs. Shiffman, Jorissen, Fannon, and Colman agreed to take a 5% reduction in salary for the fiscal year ended December 31, 2006 in order to support the Company’s cost reductions efforts. The base salaries of the named executive officers returned to normal levels for the fiscal year ended December 31, 2007. A portion of the salary may have been contributed to the Company’s 401(k) savings plan.

⁽²⁾

Messrs. Shiffman, Jorissen and Fannon are contractually entitled to receive annual incentive payments of up to 75% of base salary, if certain annual individual and Company performance objectives established by the Board are achieved and an additional 25% of base salary at the sole discretion of the Compensation Committee. Ms. Dearing and Mr. McLaren are contractually entitled to receive annual incentive payments of up to 50% of base salary, if certain annual individual and Company performance objectives established by the Compensation Committee are achieved and an additional 50% of base salary at the sole discretion of the Compensation Committee.

⁽³⁾

This column represents the dollar amount recognized for financial statement reporting purposes with respect to 2008 for the fair value of restricted stock granted to the named executive officers in current or prior years, in accordance with SFAS 123(R) except, pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For additional information, refer to note 6 of the Company’s financial statements in the Form 10-K for the year ended December 31, 2008, as filed with the SEC.

~~We believe that our Properties’ high amenity levels contribute to low turnover and generally high occupancy rates. All~~

⁽⁴⁾

Includes matching contributions to the Company’s 401(k) Plan of $2,300 for each of Messrs. Shiffman, McLaren, Jorissen, and Ms. Dearing; and $1,947 and $1,959 for Mr. Colman and Mr. Fannon, respectively, for the fiscal year ended December 31, 2008. Includes matching contributions to the Company’s 401(k) Plan of $2,250 for each of Messrs. Shiffman, Jorissen and Fannon and $1,669 for Mr. Colman for the fiscal year ended December 31, 2007. Also includes premiums for life insurance and accidental death and disability insurance in the amount of $294 for each of Messrs. Shiffman, McLaren, Jorissen, Fannon, Colman and Ms. Dearing for the fiscal year ended December 31, 2008; $276 for each of Messrs. Shiffman, Jorissen, Fannon and Colman for the fiscal year ended December 31, 2007; and $264 for the fiscal year ended December 31, 2006. Includes a total severance amount of $332,288 to be paid ratably from August 2008 through April 2009, pursuant to that certain Retirement Agreement with Mr. Fannon.

⁽⁵⁾

Includes $81,000 paid to Mr. Shiffman by Origen Financial, Inc. for service on its board of directors.

⁽⁶⁾

Includes $61,944 paid to Mr. Shiffman by Origen Financial, Inc. for service on its board of directors. The amount includes $38,750 in cash and restricted stock awards valued at $23,194.

⁽⁷⁾

Includes $56,621 paid to Mr. Shiffman by Origen Financial, Inc. for service on its board of directors. The amount includes $31,000 in cash and restricted stock awards valued at $25,621.

⁽⁸⁾

Effective February 5, 2008, Mr. Jorissen relinquished the titles of Executive Vice President, Chief Financial Officer, Treasurer and Secretary of the Company.

⁽⁹⁾

Effective February 5, 2008, Mr. Fannon relinquished titles of Chief Operating Officer and Executive Vice President of the Company, but was appointed President of the Company. Effective July 31, 2008, Mr. Fannon relinquished his role as President of the Company and retired pursuant to that certain Retirement Agreement.

Grants of Plan Based Awards

The Company, in accordance with their respective employment agreement, granted each of the ~~Properties provide residents with attractive amenities with most offering a clubhouse, a swimming pool, laundry facilities~~named officers restricted shares of the Company’s common stock.

Name	Grant Date	All Other Stock Awards: Number of Shares of Stocks or Units (#)		Grant Date Fair Value of Stock and Option Awards ⁽¹⁾
Karen J. Dearing	02/05/2008	10,000	$	198,100
John B. McLaren	02/05/2008	10,000	$	198,100

⁽¹⁾

Pursuant to SEC rules, this column represents the total fair market value of restricted stock awards, in accordance with FASB Statement 123(R), Share-Based Payment (“SFAS 123(R)”).

Thirty-five percent of the shares vest on February 5, 2012 and ~~cable television service. Many Properties offer additional amenities such as sauna/whirlpool spas, tennis, shuffleboard~~February 5, 2013, twenty percent of the shares vest on February 5, 2014 and ~~basketball courts and/or exercise rooms.~~the remaining ten percent will vest in two equal installments on February 5, 2015 and February 5, 2018.

~~We have concentrated our communities within~~

Outstanding Equity Awards at Fiscal Year-End

The following table provides certain ~~geographic areas in order~~information with respect to ~~achieve economies~~the value of ~~scale in management~~all unexercised options and ~~operation. The Properties are principally concentrated in~~restricted share awards previously granted to the ~~midwestern and southeastern United States. We believe that geographic diversification helps to insulate the portfolio from regional economic influences.~~Company’s named executive officers:

Outstanding Equity Awards at Fiscal Year-End as of December31, 2008

	Option Awards ⁽¹⁾					Share Awards ⁽²⁾
Name	Number of Securities Underlying Unexercised Options (Exercisable)	Number of Securities Underlying Unexercised Options (Unexercisable)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options	Option Exercise Price	Option Expiration Date	Number of Shares or Units of Stock that Have Not Vested		Market Value of Shares or Units of Stock that Have Not Vested ⁽³⁾	Equity Incentive Plan Awards: Number of Shares, Units, or Other Rights that have not Vested (#) ^{(10) (11)}	Equity Incentive Plan Awards: Number of Shares, Units, or Other Rights that have not Vested ($)
Gary A. Shiffman	25,000	—	—	$ 30.03	12/15/09	18,000	⁽⁴⁾	$ 252,000	—	—
	25,000	—	—	$ 27.03	04/12/11	1,415	⁽⁵⁾	$ 19,810	—	—
	—	—	—	—	—	36,751	⁽⁶⁾	$ 514,514	—	—
	—	—	—	—	—	13,000	⁽⁷⁾	$ 182,000	—	—
	—	—	—	—	—	6,250	⁽⁸⁾	$ 87,500	—	—


Karen J. Dearing	—	—	—	—	—	4,550	⁽⁷⁾	$ 63,700	—	—
	—	—	—	—	—	10,000	⁽⁹⁾	$ 140,000	—	—
	—	—	—	—	—	10,000	⁽¹²⁾	$ 140,000	—	—

John B. McLaren	—	—	—	—	—	10,000	⁽¹²⁾	$ 140,000	—	—

Jonathan M. Colman	—	—	—	—	—	3,600	⁽⁴⁾	$ 50,400	—	—
	—	—	—	—	—	517	⁽⁵⁾	$ 7,238	—	—
	—	—	—	—	—	6,500	⁽⁷⁾	$ 91,000	—	—

Jeffrey P. Jorissen ⁽¹³⁾	10,000	—	—	$ 30.03	12/15/09	12,000	⁽⁴⁾	$ 168,000	—	—
	2,250	—	—	$ 27.03	04/12/11	1,915	⁽⁵⁾	$ 26,810	—	—
	—	—	—	—	—	6,500	⁽⁷⁾	$ 91,000	—	—
	—	—	—	—	—	4,166	⁽⁸⁾	$ 58,324	—	—

Brian W. Fannon ⁽¹⁴⁾	—	—	—	—	—	—		—	—	—

⁽¹⁾

Stock options vest ratably over the three year period following the date of grant and expire on the tenth anniversary of the date of grant. All options were granted at the closing price of the Company’s Common Stock on NYSE on the date of grant; provided, however, that the options expiring on April 12, 2011 were granted at 85% of the closing price of the Company’s Common Stock on NYSE on the date of grant.

⁽²⁾

All share awards begin to vest after either the third or fourth anniversary of the date of grant.

⁽³⁾

Value based on $14.00, the closing price of the Company’s Common Stock on NYSE on December 31, 2008.

⁽⁴⁾

Shares vest ratably on January 31, 2009 and January 31, 2010.

⁽⁵⁾

Shares will vest on March 31, 2011.

⁽⁶⁾

11,083 of the shares will vest on each July 15th, beginning on July 15, 2009 and ending on July 15, 2011 and the remaining 3,502 shares will vest on July 15, 2014.

⁽⁷⁾

Fifty-four percent of the shares vest on May 10, 2009, thirty one percent of the shares vest on May 10, 2010 and the remaining will vest in two equal installments on May 10, 2011 and May 10, 2014.

⁽⁸⁾

Shares vest on May 10, 2009.

⁽⁹⁾

Shares of phantom stock that vest in four equal installments beginning on May 12, 2009 and ending on May 12, 2012. On each vesting date, Ms. Dearing receives a cash payment equal to the total number of shares vested multiplied by the ten day average trading price of the Company’s Common Stock on NYSE.

⁽¹⁰⁾

Shares of performance based restricted stock were cancelled in March of 2008.

⁽¹¹⁾

Shares of performance based shares of phantom stock were cancelled in March of 2008.

⁽¹²⁾

Thirty-five percent of the shares vest on February 5, 2012 and February 5, 2013, twenty percent of the shares vest on February 5, 2014 and the remaining ten percent will vest in two equal installments on February 5, 2015 and February 5, 2018.

⁽¹³⁾

Effective February 5, 2008, Mr. Jorissen relinquished the titles of Executive Vice President, Chief Financial Officer, Treasurer and Secretary of the Company.

⁽¹⁴⁾

Pursuant to the terms of that certain Retirement Agreement, all of Mr. Fannon’s stock options and other stock based compensation awarded to Mr. Fannon that were outstanding as of July 10, 2008 become fully vested and immediately exercisable on that date.

Option Exercises and Stock Vested During Last Fiscal Year

The following table sets forth certain information ~~relating to~~concerning shares held by our named executive officers that vested during the ~~properties owned or financed as of~~fiscal year ended on December 31, ~~2006:~~2008:

Developed
Occupancy
Occupancy
Occupancy

Sites as of
as of
as of
as of
Property and Location
12/31/2006
12/31/06⁽¹⁾
12/31/05⁽¹⁾
12/31/04⁽¹⁾

MIDWEST

Michigan

Academy/West Pointe
441
94%
98%
95%
Canton, MI

Allendale Meadows Mobile Village
352
81%
84%
85%
Allendale, MI

Alpine Meadows Mobile Village
403
87%
94%
91%
Grand Rapids, MI

Bedford Hills Mobile Village
339
79%
85%
86%
Battle Creek, MI

Brentwood Mobile Village
195
95%
92%
94%
Kentwood, MI

Byron Center Mobile Village
143
91%
96%
97%
Byron Center, MI

Candlewick Court
211
87%
89%
88%
Owosso, MI

College Park Estates
230
74%
77%
79%
Canton, MI

Continental Estates
385
49%
54%
63%
Davison, MI

Continental North
474
58%
59%
67%
Davison, MI

Country Acres Mobile Village
182
88%
91%
95%
Cadillac, MI

Country Meadows Mobile Village
577
91%
92%
94%
Flat Rock, MI

Countryside Village
359
81%
89%
92%
Perry, MI

Creekwood Meadows
336
63%
67%
72%
Burton, MI

Cutler Estates Mobile Village
259
83%
91%
92%
Grand Rapids, MI

Davison East
190
63%
67%
73%
Davison, MI

Falcon Pointe⁽⁸⁾
142
19%⁽⁸⁾
19%⁽⁸⁾
22%⁽⁸⁾
East Lansing, MI

Fisherman’s Cove
162
80%
86%
90%
Flint, MI

Grand Mobile Estates
230
79%
85%
80%
Grand Rapids, MI

Hamlin⁽⁴⁾
209
75%⁽⁴⁾
78%⁽⁴⁾
91%⁽⁴⁾
Webberville, MI

Holly Village/Hawaiian Gardens
425
97%
99%
98%
Holly, MI

Hunters Glen⁽⁸⁾
280
43%⁽⁸⁾
46%⁽⁸⁾
44%⁽⁸⁾
Wayland, MI

Kensington Meadows
290
81%
88%
82%
Lansing, MI

Kings Court Mobile Village
639
97%
98%
97%
Traverse City, MI

	Option Awards		Stock Awards
Name	Number of Shares Acquired on Exercise	Value Realized on Exercise	Number of Shares Acquired on Vesting	Value Realized on Vesting ⁽¹⁾
Gary A. Shiffman	—	—	9,000	$	172,935
	—	—	1,415	$	28,661
	—	—	11,083	$	194,895
	—	—	7,000	$	133,000
	—	—	6,250	$	118,750

Karen J. Dearing	—	—	2,450	$	46,550

John B. McLaren	—	—	—	$	—

Jonathan M. Colman	—	—	1,800	$	34,587
	—	—	517	$	10,472
	—	—	3,500	$	66,500

Developed
Occupancy
Occupancy
Occupancy

Sites as of
as of
as of
as of
Property and Location
12/31/2006
12/31/06⁽¹⁾
12/31/05⁽¹⁾
12/31/04⁽¹⁾

Knollwood Estates
161
91%
88%
84%
Allendale, MI

Lafayette Place
254
77%
85%
92%
Metro Detroit, MI

Lakeview
392
91%
91%
91%
Ypsilanti, MI

Lincoln Estates
191
96%
99%
95%
Holland, MI

Meadow Lake Estates
425
88%
91%
92%
White Lake, MI

Meadowbrook Estates
453
93%
93%
94%
Monroe, MI

Presidential Estates Mobile Village
364
85%
87%
89%
Hudsonville, MI

Richmond Place
117
95%
97%
97%
Metro Detroit, MI

River Haven Village
721
66%
68%
70%
Grand Haven, MI

Scio Farms Estates
913
95%
96%
98%
Ann Arbor, MI

Sheffield Estates
227
97%
n/a⁽³⁾
n/a⁽³⁾
Auburn Hills, MI, MI

Sherman Oaks
366
78%
83%
88%
Jackson, MI

St. Clair Place
100
88%
94%
97%
Metro Detroit, MI

Sunset Ridge⁽⁸⁾
190
82%⁽⁸⁾
75%⁽⁸⁾
64%⁽⁸⁾
Portland Township, MI

Timberline Estates
296
80%
87%
86%
Grand Rapids, MI

Town & Country Mobile Village
192
100%
98%
98%
Traverse City, MI

Village Trails⁽⁴⁾
100
73%⁽⁴⁾
72%⁽⁴⁾
78%⁽⁴⁾
Howard City, MI

White Lake Mobile Home Village
315
96%
97%
95%
White Lake, MI

White Oak Estates
480
78%
81%
80%
Mt. Morris, MI

Windham Hills Estates⁽⁴⁾
402
69%⁽⁴⁾
72%⁽⁴⁾
72%⁽⁴⁾
Jackson, MI

Woodhaven Place
220
94%
96%
96%
Metro Detroit, MI

Michigan Total
14,332
82%
84%
86%

Indiana

Brookside Mobile Home Village
570
67%
73%
73%
Goshen, IN

Carrington Pointe⁽⁴⁾
320
71%⁽⁴⁾
72%⁽⁴⁾
76%⁽⁴⁾
Ft. Wayne, IN

Developed
Occupancy
Occupancy
Occupancy

Sites as of
as of
as of
as of
Property and Location
12/31/2006
12/31/06⁽¹⁾
12/31/05⁽¹⁾
12/31/04⁽¹⁾

Clear Water Mobile Village
227
75%
78%
77%
South Bend, IN

Cobus Green Mobile Home Park
386
69%
71%
72%
Elkhart, IN

Deerfield Run⁽⁴⁾
175
61%⁽⁴⁾
67%⁽⁴⁾
68%⁽⁴⁾
Anderson, IN

Four Seasons
218
88%
92%
94%
Elkhart, IN

Holiday Mobile Home Village
326
88%
91%
91%
Elkhart, IN

Liberty Farms
220
97%
97%
97%
Valparaiso, IN

Maplewood
207
88%
79%
83%
Lawrence, IN

Meadows
330
59%
69%
73%
Nappanee, IN

Pebble Creek^{(8) (9)}
258
81%⁽⁸⁾
78%⁽⁸⁾
76%⁽⁸⁾
Greenwood, IN

Pine Hills
129
84%
88%
80%
Middlebury, IN

Roxbury Park
398
88%
92%
93%
Goshen, IN

Timberbrook
567
59%
67%
75%
Bristol, IN

Valley Brook
799
63%
69%
75%
Indianapolis, IN

West Glen Village
552
86%
88%
87%
Indianapolis, IN

Woodlake Estates
338
51%
52%
60%
Ft. Wayne, IN

Woods Edge Mobile Village⁽⁴⁾
598
58%⁽⁴⁾
58%⁽⁴⁾
66%⁽⁴⁾
West Lafayette, IN

Indiana Total
6,618
71%
75%
78%

OTHER

Apple Creek Manufactured Home Community and Self Storage
176
87%
90%
88%
Amelia, OH

Autumn Ridge
413
98%
97%
98%
Ankeny, IA

Bell Crossing⁽⁴⁾
239
54%⁽⁴⁾
47%⁽⁴⁾
44%⁽⁴⁾
Clarksville, TN

Boulder Ridge⁽⁸⁾
527
62%⁽⁸⁾
65%⁽⁸⁾
59%⁽⁸⁾
Pflugerville, TX

Branch Creek Estates
392
97%
96%
94%
Austin, TX

Byrne Hill Village
236
92%
98%
98%
Toledo, OH

Candlelight Village
309
93%
94%
93%
Chicago Heights, IL

	Option Awards		Stock Awards
Name	Number of Shares Acquired on Exercise	Value Realized on Exercise	Number of Shares Acquired on Vesting	Value Realized on Vesting ⁽¹⁾
Jeffrey P. Jorissen	—	—	6,000	$	115,290
	—	—	1,915	$	38,788
	—	—	3,500	$	66,500
	—	—	4,167	$	79,173


Brian W. Fannon	—	—	3,000	$	57,645
	—	—	6,000	$	108,270
	—	—	1,000	$	20,255
	—	—	1,000	$	18,045
	—	—	5,250	$	99,750
	—	—	9,750	$	175,939
	—	—	2,083	$	39,577
	—	—	2,084	$	37,606

⁽¹⁾

Value based on the average of the high and low of the share price on the vesting date

Change in Control and Severance Payments

Developed
Occupancy
Occupancy
Occupancy

Sites as of
as of
as of
as of
Property and Location
12/31/2006
12/31/06⁽¹⁾
12/31/05⁽¹⁾
12/31/04⁽¹⁾

Casa del Valle^{(1) (7)}
116/401
100%
98%
97%
Alamo, TX

Catalina
462
67%
68%
70%
Middletown, OH

Cave Creek⁽⁸⁾
289
67.8%⁽⁸⁾
67.1%⁽⁸⁾
63%⁽⁸⁾
Evans, CO

Chisholm Point Estates
416
84%
84%
86%
Pflugerville, TX

Comal Farms^{(8) (9)}
349
62%⁽⁸⁾
56%⁽⁸⁾
48%⁽⁸⁾
New Braunfels, TX

Countryside Atlanta
271
96%
96%
94%
Lawrenceville, GA

Countryside Gwinnett
331
89%
90%
88%
Buford, GA

Countryside Lake Lanier
548
82%
81%
80%
Buford, GA

Creekside^{(8) (9)}
46
72%⁽⁸⁾
76%⁽⁸⁾
78%⁽⁸⁾
Reidsville, NC

Desert View Village⁽⁸⁾
93
48%⁽⁸⁾
50%⁽⁸⁾
52%⁽⁸⁾
West Wendover, NV

Eagle Crest⁽⁸⁾
318
75%⁽⁸⁾
71%⁽⁸⁾
66%⁽⁸⁾
Firestone, CO

East Fork^{(8) (9)}
215
86%⁽⁸⁾
93%⁽⁸⁾
77%⁽⁸⁾
Batavia, OH

Edwardsville
634
71%
74%
79%
Edwardsville, KS

Forest Meadows
76
93%
93%
83%
Philomath, OR

Glen Laurel^{(8) (9)}
261
36%⁽⁸⁾
31%⁽⁸⁾
26%⁽⁸⁾
Concord, NC

High Pointe
411
97%
94%
90%
Frederica, DE

Kenwood RV and Mobile Home Plaza^{(1) (7)}
37/280
100%
100%
100%
LaFeria, TX

Meadowbrook^{(8) (9)}
177
94%⁽⁸⁾
90%⁽⁸⁾
74%⁽⁸⁾
Charlotte, NC

North Point Estates⁽⁸⁾
108
44%⁽⁸⁾
37%⁽⁸⁾
34%⁽⁸⁾
Pueblo, CO

Oak Crest⁽⁸⁾
335
53%⁽⁸⁾
57%⁽⁸⁾
51%⁽⁸⁾
Austin, TX

Oakwood Village
511
84%
83%
78%
Miamisburg, OH

Orchard Lake
147
97%
97%
97%
Milford, OH

Pecan Branch⁽⁸⁾
69
55%⁽⁸⁾
51%⁽⁸⁾
61%⁽⁸⁾
Georgetown, TX

Pheasant Ridge
553
100%
100%
100%
Lancaster, PA

Pin Oak Parc
502
88%
88%
94%
O’Fallon, MO

Messrs. Shiffman, McLaren Jorissen, and Ms. Dearing have contractual arrangements with the Company providing for severance and change in control payments. If any such executive is terminated without “cause,” he or she is entitled to any accrued but unpaid salary, incentive compensation and benefits through the date of termination and a continuation of salary for up to eighteen months after termination in the case of Messrs. Shiffman and Jorissen and up to twelve months in the case of Ms. Dearing and Mr. McLaren subject to the execution of a general release and continued compliance with his or her restrictive covenant. If Messrs. Shiffman’s, McLaren’s Jorissen’s, or Ms. Dearing’s employment is terminated due to death or disability, he or she or his or her heirs, is entitled to any accrued but unpaid salary, incentive compensation and benefits through the date of termination or death and a continuation of salary for up to twenty four months, in the case of Messrs. Shiffman, Jorissen and Ms. Dearing and twelve months in the case of Mr. McLaren. Upon a change of control and if Messrs. Shiffman, McLaren Jorissen, or Ms. Dearing are terminated within two years of the date of such change of control or less than two year remain under the term of their employment agreements, then each of them would receive 2.99 times their annual salary and a continuation of health and insurance benefits for one year. Under any of the foregoing events of termination or change of control, all stock options and other stock based compensation awarded to the executive shall become fully vested and immediately exercisable. No information in included for Mr. Fannon as he retired from the Company, pursuant to that certain Retirement Agreement effective as of July 31, 2008.

Developed
Occupancy
Occupancy
Occupancy

Sites as of
as of
as of
as of
Property and Location
12/31/2006
12/31/06⁽¹⁾
12/31/05⁽¹⁾
12/31/04⁽¹⁾

Pine Ridge
245
94%
94%
91%
Petersburg, VA

Pine Trace⁽⁸⁾
420
67%⁽⁸⁾
74%⁽⁸⁾
71%⁽⁸⁾
Houston, TX

River Ranch^{(8) (9)}
121
74%⁽⁸⁾
60%⁽⁸⁾
27%⁽⁸⁾
Austin, TX

River Ridge⁽⁸⁾
337
74%⁽⁸⁾
76%⁽⁸⁾
77%⁽⁸⁾
Austin, TX

Saddle Brook⁽⁸⁾
261
57%⁽⁸⁾
46%⁽⁸⁾
37%⁽⁸⁾
Austin, TX

Sea Air^{(1) (7)}
370/527
100%
100%
97%
Rehoboth Beach, DE

Snow to Sun^{(1) (7)}
180/488
100%
99%
100%
Weslaco, TX

Southfork
477
72%
75%
76%
Belton, MO

Stonebridge^{(8) (9)}
340
76%⁽⁸⁾
74%⁽⁸⁾
61%⁽⁸⁾
San Antonio, TX

Summit Ridge^{(8) (9)}
252
81%⁽⁸⁾
73%⁽⁸⁾
65%⁽⁸⁾
Converse, TX

Sunset Ridge^{(8) (9)}
170
84%⁽⁸⁾
79%⁽⁸⁾
73%⁽⁸⁾
Kyle, TX

Sun Villa Estates
324
100%
100%
99%
Reno, NV

Timber Ridge
585
88%
90%
94%
Ft. Collins, CO

Westbrook Village⁽⁶⁾
344
96%
96%
92%
Toledo, OH

Westbrook Senior Village
112
99%
100%
100%
Toledo, OH

Willowbrook Place
266
95%
97%
96%
Toledo, OH

Woodlake Trails^{(8) (9)}
134
94%⁽⁸⁾
93%⁽⁸⁾
87%⁽⁸⁾
San Antonio, TX

Woodland Park Estates
399
95%
93%
89%
Eugene, OR

Woodside Terrace
439
87%
93%
93%
Holland, OH

Worthington Arms
224
94%
95%
92%
Lewis Center, OH

Other Total
16,560
82%
82%
75%

SOUTHEAST

Florida

Arbor Terrace RV Park
390
n/a⁽⁵⁾
n/a⁽⁵⁾
n/a⁽⁵⁾
Bradenton, FL

Ariana Village Mobile Home Park
208
90%
89%
87%
Lakeland, FL

Buttonwood Bay^{(1) (7)}
407/940
100%
100%
100%
Sebring, FL

Developed
Occupancy
Occupancy
Occupancy

Sites as of
as of
as of
as of
Property and Location
12/31/2006
12/31/06⁽¹⁾
12/31/05⁽¹⁾
12/31/04⁽¹⁾

Gold Coaster^{(1) (7)}
388/546
99%
98%
100%
Homestead, FL

Groves RV Resort
287
n/a⁽⁵⁾
n/a⁽⁵⁾
n/a⁽⁵⁾
Ft. Myers, FL

Holly Forest Estates
402
100%
100%
100%
Holly Hill, FL

Indian Creek Park^{(1) (7)}
353/1474
100%
100%
100%
Ft. Myers Beach, FL

Island Lakes
301
100%
100%
100%
Merritt Island, FL

Kings Lake
245
100%
100%
100%
Debary, FL

Lake Juliana Landings
276
95%
91%
87%
Auburndale, FL

Lake San Marino RV Park
411
n/a⁽⁵⁾
n/a⁽⁵⁾
n/a⁽⁵⁾
Naples, FL

Meadowbrook Village
257
100%
99%
100%
Tampa, FL

Orange Tree Village
246
100%
99%
100%
Orange City, FL

Royal Country
864
99%
100%
100%
Miami, FL

Saddle Oak Club
376
100%
100%
100%
Ocala, FL

Siesta Bay RV Park
798
n/a⁽⁵⁾
n/a⁽⁵⁾
n/a⁽⁵⁾
Ft. Myers Beach, FL

Silver Star Mobile Village
407
99%
99%
98%
Orlando, FL

Tampa East^{(1) (7)}
31/699
97%
97%
n/a⁽²⁾
Tampa, FL

Water Oak Country Club Estates
969
100%
98%
100%
Lady Lake, FL

Florida Total
10,096
99%
98%
98%

TOTAL/AVERAGE
47,606
83%
84%
84%
TOTAL STABILIZED COMMUNITIES
42,276
85%
87%
87%
TOTAL DEVELOPMENT COMMUNITIES
5,330
66%
64%
58%

⁽¹⁾Occupancy percentage relates to manufactured housing sites, excluding recreational vehicle sites.
Data presented MH Sites/Total Sites.
⁽²⁾Acquired 2005.
⁽³⁾Acquired 2006.
⁽⁴⁾Occupancy in these properties reflects the fact that these communities are in a lease-up phase
following an expansion.
⁽⁵⁾This Property contains only recreational vehicle sites.
⁽⁶⁾ The Company formerly leased this Property and the Company purchased this Property in January 2004.
⁽⁷⁾This Property contains recreational vehicle sites.
⁽⁸⁾Occupancy in these properties reflects the fact that these communities are newly developed
from the ground up.
⁽⁹⁾ This Property is owned by an affiliate of Sunchamp LLC, an entity in which the Company owns
approximately a 74.1 percent equity interest as of December 31, 2006.

~~Leases.~~ The ~~typical lease we enter into with~~following tables describe the potential payments upon termination without cause, a ~~tenant~~termination due to death or disability or after a change of control of the Company (and associated termination of the executives) for the rental of a site is month-to-month or year-to-year, renewable upon the consent of both parties, or, in some instances, as provided by statute. In some cases, leases are for one-year terms, with up to ten renewal options exercisable by the tenant, with rent adjusted for increases in the consumer price index. These leases are cancelable for non-payment of rent, violation of community rules and regulations or other specified defaults. During the past five years, on average 3.5 percent of the homes in our communities have been removed by their owners and 7.7 percent of the homes have been sold by their owners to a new owner who then assumes rental obligations as a community resident. The small percentage of homes removed from our communities is impacted by the $3,000 to $8,000 cost to move a home. The above experience can be summarized as follows: the average resident remains in our communities for approximately thirteen years, while the average home, which gives rise to the rental stream, remains in our communities for approximately twenty nine years. See “Regulations and Insurance.”following named executive officers:

~~ITEM 3.~~

~~LEGAL PROCEEDINGS~~Termination Without Cause ⁽¹⁾

Name	Cash Payment ⁽²⁾		Acceleration of Vesting of Stock Awards ⁽³⁾		Benefits		Total
Gary A. Shiffman	$	897,225	$	1,055,824	$	—	$	1,953,049
Karen J. Dearing	$	245,000	$	343,700	$	—	$	588,700
John B. McLaren	$	265,000	$	140,000	$	—	$	405,000
Jonathan M. Colman	$	—	$	—	$	—	$	—
Jeffery P. Jorissen	$	517,500	$	344,134	$	—	$	861,634

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

As announced on February 27, 2006, the U.S. Securities and Exchange Commission (the “SEC”) completed its inquiry regarding the Company’s accounting for its SunChamp investment during 2000, 2001 and 2002, and the Company and the SEC entered into an agreed-upon Administrative Order (the “Order”). The Order required that the Company cease and desist from violations of certain non intent-based provisions of the federal securities laws, without admitting or denying any such violations.

The Order included the following findings by the SEC, entered without admission or denial by the Company: (a) the Company’s sales of equity interests in SunChamp to third-party investors in 2000 and 2001 should have been disregarded for purposes of allocating losses and, as a result, the Company should have recognized its proportionate share of SunChamp losses during the applicable periods in accordance with the equity method of accounting; and (b) the SunChamp losses should have been reflected in the period incurred, rather than applying a ninety (90) day lag. As a result of these findings, the SEC concluded that the Company overstated its net income for the years ended December 31, 2000, 2001 and 2002 by approximately $3.7 million, $4.7 million and $2.7 million, respectively.

In correspondence with the SEC subsequent to the entry of the Order, the SEC asked the Company to expand its financial statement disclosure to include more specific details relating to the SEC’s findings and to disclose the Company’s basis for determining that restating its financial statements is not necessary in light of those findings. The Company has considered the effect of the SEC’s findings in the Order on its financial disclosure and overall disclosure obligations. After review and analysis, the Company has determined not to revise its financial statements because management believes that the impact of the findings is not material, either quantitatively or qualitatively, to the Company’s financial statements as a whole. The Company included similar disclosure in its Form 10-Q for the quarter ended September 30, 2006, and has not received any further communication from the SEC on this matter.

On February 27, 2006, the SEC filed a civil action against the Company’s Chief Executive Officer, Chief Financial Officer and a former controller in the United States District Court for the Eastern District of Michigan alleging various claims generally consistent with the SEC’s findings set forth in the Order. This action is currently in the discovery stage. The Company continues to indemnify such employees for all costs and expenses incurred in connection with such civil action.

The Company is involved in various other 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.

~~ITEM 4.~~

~~SUBMISSION OF MATTERS TO A VOTE OF SECURITY~~
~~HOLDERS~~Termination Due to Death or Disability ⁽¹⁾

~~Not applicable~~

~~PART II~~

Name	Cash Payment ⁽²⁾		Acceleration of Vesting of Stock Awards ⁽³⁾		Benefits		Total
Gary A. Shiffman	$	1,196,300	$	1,055,824	$	—	$	2,252,124
Karen J. Dearing	$	490,000	$	343,700	$	—	$	833,700
John B. McLaren	$	265,000	$	140,000	$	—	$	405,000
Jonathan M. Colman	$	—	$	148,638	$	—	$	148,638
Jeffery P. Jorissen	$	690,000	$	344,134	$	—	$	1,034,134

~~ITEM 5.~~Change of Control ⁽¹⁾

Name	Cash Payment ⁽²⁾		Acceleration of Vesting of Stock Awards ⁽³⁾		Benefits ⁽⁴⁾		Total		��
Gary A. Shiffman	$	1,788,469	$	1,055,824	$	8,616	$	2,852,909
Karen J. Dearing	$	732,550	$	343,700	$	252	$	1,076,502
John B. McLaren	$	792,350	$	140,000	$	8,616	$	940,966
Jonathan M. Colman	$	—	$	148,638	$	—	$	148,638
Jeffery P. Jorissen	$	1,031,550	$	344,134	$	8,616	$	1,384,300

⁽¹⁾

The following table does not include information regarding Brian W. Fannon as he retired from the Company, pursuant to that certain Retirement Agreement, effective as of July 31, 2008.

⁽²⁾

Assumes a termination on December 31, 2008 and payments based on base salary (without taking into account any accrued incentive based compensation) as of December 31, 2008 for each executive.

⁽³⁾

Calculated based on a termination as of December 31, 2008 and the fair market value of the Company’s Common Stock on NYSE as of December 31, 2008.

⁽⁴⁾

Reflects continuation of health benefits, life insurance and accidental death and disability insurance for the periods specified above.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Amended Report.

Respectfully submitted,

Members of the Compensation Committee:

Ted J. Simon

Clunet R. Lewis

Ronald L. Piasecki

Report of the Audit Committee

The Board maintains an Audit Committee comprised of three of the Company’s directors. The directors who serve on the Audit Committee are all “independent” for purposes of the New York Stock Exchange listing standards. The Audit Committee held six (6) formal meetings and several informal meetings during the 2008 fiscal year.

In accordance with its written charter, the Audit Committee assists the Board with fulfilling its oversight responsibility regarding the quality and integrity of the accounting, auditing and financial reporting practices of the Company. In discharging its oversight responsibilities regarding the audit process, the Audit Committee:

reviewed and discussed the audited financial statements with management and Grant Thornton, LLP, the Company’s independent auditors, for the fiscal year ended December 31, 2008;

discussed with the independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61 (Codification of Statements on Auditing Standards); and

reviewed the written disclosures and the letter from the independent auditors required by the Independence Standards Board’s Standard No. 1 (Independence Discussions with Audit Committees), and discussed with the independent auditors any relationships that may impact their objectivity and independence.

Based upon the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as filed with the Securities and Exchange Commission.

The Audit Committee has considered and determined that the level of fees of Grant Thornton LLP for provision of services other than the audit services is compatible with maintaining the auditor’s independence.

Respectfully Submitted,

Members of the Audit Committee:

Clunet R. Lewis

Robert H. Naftaly

Stephanie W. Bergeron

Item 12

~~MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES~~Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

~~Market Information~~ Security Ownership of Certain Beneficial Owners and Management

Our common stock has been listed on the New York Stock Exchange (“NYSE”) since December 8, 1993, under the symbol “SUI.” On March 1, 2007, the closing sales price of the common stock was $30.27 and the common stock was held by approximately 520 holders of record. The following table sets forth, ~~the high and low closing sales prices per share for the common stock for the periods indicated as reported by the NYSE and the distributions per share paid by~~based upon information available to the Company, ~~with respect~~as of March 26, 2009, the shareholdings of: (a) each person known to the Company to be the beneficial owner of more than five percent (5%) of the Common Stock; (b) each ~~period.~~director of the Company; (c) each executive officer listed in the Summary Compensation Table; and (d) all executive officers and directors of the Company as a group:

High

Low

Distribution

Fiscal Year Ended December 31, 2005

First Quarter of 2005

$
39.60

$
34.70

$
0.61

Second Quarter of 2005

38.20

34.45

0.63

Third Quarter of 2005

38.75

31.27

0.63

Fourth Quarter of 2005

32.83

29.51

0.63

Fiscal Year Ended December 31, 2006

First Quarter of 2006

$
36.71

$
31.32

$
0.63

Second Quarter of 2006

34.31

30.57

0.63

Third Quarter of 2006

33.12

31.01

0.63

Fourth Quarter of 2006

35.34

31.81

0.63

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership		Percent of Outstanding Shares⁽¹⁾
Gary A. Shiffman 27777 Franklin Road Suite 200 Southfield, Michigan 48034	2,006,296	⁽²⁾	10.8	%
Jeffrey P. Jorissen 27777 Franklin Road Suite 200 Southfield, Michigan 48034	114,433	⁽³⁾	*
Jonathan M. Colman 27777 Franklin Road Suite 200 Southfield, Michigan 48034	35,838	⁽⁴⁾	*
Ted J. Simon 27777 Franklin Road Suite 200 Southfield, Michigan 48034	18,741	⁽⁵⁾	*
Paul D. Lapides 27777 Franklin Road Suite 200 Southfield, Michigan 48034	14,400	⁽⁶⁾	*
Clunet R. Lewis 27777 Franklin Road Suite 200 Southfield, Michigan 48034	47,500	⁽⁷⁾	*
Ronald L. Piasecki 27777 Franklin Road Suite 200 Southfield, Michigan 48034	165,190	⁽⁸⁾	*
Arthur A. Weiss 27777 Franklin Road Suite 2500 Southfield, Michigan 48034	637,273	⁽⁹⁾	3.4	%
Robert H. Naftaly 27777 Franklin Road Suite 200 Southfield, Michigan 48034	8,000	⁽¹⁰⁾	*
Stephanie W. Bergeron 27777 Franklin Road Suite 200 Southfield, Michigan 48034	7,000	⁽¹¹⁾	*
Karen J. Dearing 27777 Franklin Road Suite 200 Southfield, Michigan 48034	16,246		*

Set forth below is a line graph comparing the yearly percentage change in the cumulative total shareholder return on the Common Stock against the cumulative total return of a broad market index composed of all issuers listed on the New York Stock Exchange and an industry index comprised of twenty-nine publicly traded real estate investment trusts, for the five year period ending on December 31, 2006. This line graph assumes a $100 investment on December 31, 2001, a reinvestment of dividends and actual increase

Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Outstanding Shares⁽¹⁾
John B. McLaren 27777 Franklin Road Suite 200 Southfield, Michigan 48034	10,414	*
Brian Fannon 27777 Franklin Road Suite 200 Southfield, Michigan 48034	27,780	*
The Vanguard Group, Inc.⁽¹²⁾ 100 Vanguard Blvd. Malvern, PA 19355	1,489,015	8.04	%
Barclays Global Investors, NA.⁽¹³⁾ 400 Howard Street San Francisco, CA 94105	1,360,669	7.4	%
Wells Fargo & Company⁽¹⁴⁾ 420 Montgomery Street San Francisco, CA 94163	993,125	5.4	%
All current and former executive officers and directors as a group (13 persons)⁽¹⁵⁾	3,109,111	16.8	%

* Less than one percent (1%) of the market value of the Company’s Common Stock relative to an initial investment of $100. The comparisons in this table are required by the SEC and are not intended to forecast or be indicative of possible future performance of the Company’s Common Stock.outstanding shares.

2001
2002
2003
2004
2005
2006
SUN COMMUNITIES, INC.
100.00
104.28
117.53
130.36
109.10
121.38
HEMSCOTT GROUP INDEX
100.00
94.82
119.90
159.09
175.20
242.05
NYSE MARKET INDEX
100.00
81.69
105.82
119.50
129.37
151.57

⁽¹⁾

In accordance with SEC regulations, the percentage calculations are based on 18,509,130 shares of Common Stock issued and outstanding as of March 26, 2009 plus shares of Common Stock which may be acquired pursuant to options exercisable, common limited partnership interests (“Common OP Units”) and preferred limited partnership interests (“Preferred OP Units”) of Sun Communities Operating Limited Partnership that are convertible into Common Stock, within sixty days of March 26, 2009, by each individual or group listed.

⁽²⁾

Includes: (a) 409,428 Common OP Units convertible into shares of Common Stock; (b) 50,000 shares of Common Stock which may be acquired pursuant to options exercisable within sixty days of March 26, 2009; (c) 453,841 shares of Common Stock and 141,794 Common OP Units owned by certain limited liability companies of which Mr. Shiffman is a member and a manager; and (d) a beneficial interest only in 25,000 Common OP Units. Mr. Shiffman disclaims beneficial ownership of 3,000 Common OP Units convertible into shares of Common Stock and 2,300 shares of Common Stock held by other family members because he does not have a pecuniary interest therein.

⁽³⁾

Includes: 12,250 shares of Common Stock which may be acquired pursuant to options exercisable within sixty days of March 26, 2009.

⁽⁴⁾

Includes 7,500 Common OP Units convertible into shares of Common Stock.

⁽⁵⁾

Includes 12,000 shares of Common Stock which may be acquired pursuant to options exercisable within sixty days of March 26, 2009.

⁽⁶⁾

Includes 12,000 shares of Common Stock which may be acquired pursuant to options exercisable within sixty days of March 26, 2009.

⁽⁷⁾

Includes 20,000 Common OP Units convertible into shares of Common Stock. Also includes 8,500 shares of Common Stock which may be acquired pursuant to options exercisable within sixty days of March 26, 2009.

⁽⁸⁾

Includes: (a) 17,437 Common OP Units convertible into shares of Common Stock and 139,735 Preferred OP Units convertible into Common OP Units (which are convertible into shares of Common Stock); (b) 8,000 shares of Common Stock which may be acquired pursuant to options exercisable within sixty days of March 26, 2009.

⁽⁹⁾

Includes 6,938 Common OP Units convertible into shares of Common Stock and 12,000 shares of Common Stock which may be acquired pursuant to options exercisable within sixty days of March 26, 2009. Also, includes: (a) 453,841 shares of Common Stock and 141,794 Common OP Units owned by certain limited liability companies of which Mr. Weiss is a manager, (b) 12,700 shares of Common Stock held by the 1997 Shiffman Charitable Remainder Unitrust for which Mr. Weiss is a Co-Trustee and (c) a beneficial interest only in 10,000 Common OP Units. Mr. Weiss does not have a pecuniary interest in any of the 1997 Shiffman Charitable Remainder Unitrust or the limited liability companies described above and, accordingly, Mr. Weiss disclaims beneficial ownership of the 453,841 shares of Common Stock and the 141,794 Common OP Units held by the limited liability companies described above and the 12,700 shares of Common Stock held by the 1997 Shiffman Charitable Remainder Unitrust.

⁽¹⁰⁾

Includes 1,000 Shares of Common Stock which may be acquired pursuant to options exercisable within sixty days of March 26, 2009.

⁽¹¹⁾

Includes 1,000 Shares of Common Stock which may be acquired pursuant to options exercisable within sixty days of March 26, 2009.

⁽¹²⁾

According to the Schedule 13G filed with the SEC for calendar year 2008, The Vanguard Group, Inc., in its capacity as investment advisor, beneficially owns 1,489,015 shares of Common Stock which are held of record by clients of The Vanguard Group, Inc.

⁽¹³⁾

According to the Schedule 13G filed with the SEC for calendar year 2008, Barclays Global Investors, NA., in its capacity as a Bank, as defined in section 3(a)(6) of the Securities Exchange Act of 1934, beneficially owns 1,360,669 shares of Common Stock of the Company.

⁽¹⁴⁾

According to the Schedule 13G filed with the SEC for calendar year 2008, Wells Fargo & Company, in its capacity as a parent holding company or control person in accordance with 240.13d-1(b)(1)(ii)(G), beneficially owns 993,125 shares of Common Stock of the Company.

⁽¹⁵⁾

Includes (a) 764,891 Common OP Units convertible into shares of Common Stock and 139,735 Preferred OP Units convertible into Common OP Units (which are convertible into Common Stock); and (b) 116,750 shares of Common Stock which may be acquired pursuant to options exercisable within sixty days of March 26, 2009.

~~Recent Sales of Unregistered~~ Securities

~~On March 31, 2006, the Operating Partnership issued and immediately redeemed 26,761 Common Operating Partnership Units, (“OP Units”), from Water Oak, Ltd.~~ Authorized for ~~an aggregate purchase price of $961,540~~.

~~In 2006, the Company issued 26,633 shares of its common stock upon conversion of 26,633 partnership units.~~

All of the above partnership units and shares of common stock were issued in private placements in reliance on Section 4(2) of the Securities Act of 1933, as amended, including Regulation D promulgated thereunder. No underwriters were used in connection with any of such issuances.

Issuance Under Equity Compensation ~~Plan Information~~Plans

The following table reflects information about the securities authorized for issuance under the Company’s equity compensation plans as of December 31, ~~2006.~~

2008.

(a)

(b)

(c)

Plan Category

Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights

Weighted-average
exercise price of
outstanding options,
warrants and rights

Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column a)

Equity compensation
plans approved by
shareholders

258,201

$
32.23

83,000

Equity compensation
plans not approved by
shareholders ⁽¹⁾

44,846

$
32.75

—

TOTAL

303,047

83,000

	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column a)
	(a)	(b)		(c)
Equity compensation plans approved by shareholders	168,201	$	30.39	171,018
Equity compensation plans not approved by shareholders ⁽¹⁾	37,705		32.75	—
Total	205,906	$	30.82	171,018

⁽¹⁾

On May 29, 1997, the Company established a Long Term Incentive Plan (the “LTIP”) pursuant to which all full-time salaried and full-time commission only employees of the Company, excluding the Company’s officers, were entitled to receive options to purchase shares of the Company’s common stock at $32.75 per share (i.e., the average of the highest and lowest selling prices for the common stock on May 29, 1997), on January 31, 2002. In accordance with the terms of the LTIP, (a) the Company granted the eligible participants options to purchase 167,918 shares of common stock; and (b) each eligible participant received an option to purchase a number of shares of common stock equal to the product of 167,918 and the quotient derived by dividing such participant’s total compensation during the period beginning on January 1, 1997 and ending on December 31, 2001 (the “Award Period”) by the aggregate compensation of all of the eligible participants during the Award Period.

2923

~~ITEM 6.~~Item 13

~~SELECTED FINANCIAL DATA~~Certain Relationships and Related Transactions, and Director Independence

Year Ended December 31,

2006 ^(b)

2005^(b)

2004^(a,b)

2003^(a,b)

2002^(a)

(In thousands except for per share and other data)

OPERATING DATA:

Revenues

$
226,894

$
210,865

$
203,348

$
193,503

$
159,629

Income (loss) from continuing operations

$
(25,257
)
$
(6,276
)
$
(40,605
)
$
13,702

$
11,923

Net income (loss)

$
(24,968
)
$
(5,452
)
$
(40,468
)
$
23,714

$
13,592

Income (loss) from continuing operations per share:

Basic

$
(1.44
)
$
(0.35
)
$
(2.22
)
$
0.75

$
0.68

Diluted

$
(1.44
)
$
(0.35
)
$
(2.22
)
$
0.75

$
0.67

Distributions per common share

$
2.52

$
2.50

$
2.44

$
2.41

$
2.29

BALANCE SHEET DATA:

Investment property, before accumulated depreciation

$
1,512,762

$
1,458,122

$
1,380,553

$
1,220,405

$
1,174,837

Total assets

$
1,289,739

$
1,320,536

$
1,403,167

$
1,221,574

$
1,163,976

Total debt

$
1,166,850

$
1,123,468

$
1,078,442

$
773,328

$
667,373

Stockholders’ equity

$
79,197

$
143,257

$
211,746

$
326,610

$
319,532

OTHER FINANCIAL DATA:

Income from real property operations ^(c)

$
123,550

$
118,721

$
111,848

$
107,306

$
105,671

Income from home sales and home rentals ^(c)

$
8,233

$
6,236

$
4,615

$
6,898

$
—

Funds from operations (FFO) ^(d)

$
34,560

$
51,313

$
(3,295
)
$
65,525

$
69,233

FFO per weighted average Common Share/OP Unit:

Basic

$
1.74

$
2.54

$
(0.16
)
$
3.16

$
3.43

Diluted

$
1.72

$
2.54

$
(0.16
)
$
3.14

$
3.40

OTHER DATA (at end of period):

Total properties

136

135

136

127

129

Total sites

47,606

47,385

46,856

43,875

43,959

^(a) Operating data for the years ended December 31, 2004, 2003, and 2002, have been restated to reflect the reclassifications required under SFAS No. 144 for the properties sold in 2005. Also, operating data for the year ended December 31, 2002, have been restated to reflect the reclassifications required under SFAS No. 144 for the properties sold in 2003.

^(b)~~Selected financial data for 2006, 2005, 2004, and 2003 includes amounts from SHS which was consolidated during 2003.~~

^(c)~~See Note (1) following Same Property Information on page 38.~~

^(d)~~See Other, page 43.~~

~~ITEM 7.~~

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

~~Overview~~

~~The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction~~Relationship with ~~the Consolidated Financial Statements and notes thereto elsewhere herein.~~

The Company is a fully integrated, self-administered and self-managed REIT which owns, operates, develops and finances manufactured housing communities concentrated in the midwestern and southeastern United States. As of December 31, 2006, the Company owned and operated a portfolio of 136 developed properties located in eighteen states, including 124 manufactured housing communities, four recreational vehicle communities, and eight properties containing both manufactured housing and recreational vehicle sites.

During 2006, the Company acquired a manufactured home community located in Oakland County, Michigan with occupancy of approximately 95 percent for a total purchase price of $7.8 million. The transaction included the assumption of $4.5 million of debt.

In recent years the operations of manufactured homebuilders, dealers, and the companies that finance the purchase of the homes have experienced severe losses and substantial volatility. New home shipments have declined from approximately 373,000 in 1998 to approximately 118,000 in 2006, marking a 45-year low for the industry. The decline was largely due to the turmoil in the financing side of the industry as lenders experienced substantial losses arising from defaults on poorly underwritten loans in the mid to late 1990s and beyond. As a result of the losses, the lenders experienced liquidity constraints and significantly tightened underwriting standards thus reducing the demand for new homes.

These trends may be abating as the volume of repossessed homes in the market place appears to be declining. Newly repossessed homes are also declining as the reinforcing effects of tightened underwriting standards and reduced new home financing volumes impact the industry.

The effect of these trends on the Company has been to reduce occupancies in our portfolio as the demand of tenants for sites in our communities has declined for the above-stated reasons. The rate of leasing in our new community developments has likewise slowed. Despite these trends, the Company’s same property portfolio has consistently reflected growth in net operating income evidencing the revenue and operating stability long associated with the business of owning and operating manufactured housing communities.

While the problems which directly impacted the manufacturers, dealers, and lenders appear to be bottoming, the Company does not expect a rapid or strong recovery in its operations. The Company expects a gradually improving leasing environment in its portfolio.

As a result of these industry conditions, a large quantity of homes repossessed by lenders have become available for purchase at discounts of up to 50% and more from original cost or loan amount. The Company has made every effort to acquire these value-priced homes especially as the alternative would likely be the removal of the homes from the community. Such removal would create total dependence on the sale of a new home to fill the site. As new home shipments have declined by over two thirds from their peak in 1998 to current levels, such dependence would leave the Company vulnerable to a recovery in new home shipments as its primary method to improve occupancy.
The Company intends to sell these value-priced homes to residents over time. In the meantime it is most economical to lease the homes to residents. At December 31, 2006, the Company had 4,576 homes rented in its communities which comprise over 47,000 sites. All renters are subject to underwriting criteria. The Company expects to continue to acquire homes from lenders as long as the pricing of the homes remains compelling. The Company is actively developing programs for its renters and others to acquire these homes.
~~Critical Accounting Policies and Estimates~~
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses the Company’s consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. In preparing these financial statements, management has made its best estimates and judgment of certain amounts included in the financial statements. Nevertheless, actual results may differ from these estimates under different assumptions or conditions.
~~Management believes the following significant accounting policies, among others, affect its more significant judgments and estimates used in the preparation of its consolidated financial statements:~~

~~Impairment of Long-Lived Assets and Investment in Affiliates~~. Rental property is recorded at cost, less accumulated depreciation. The Company measures the recoverability of its assets in accordance with Statement of Financial Accounting Standards No. 144 (“SFAS 144”), “Accounting for the Impairment or Disposal of Long Lived Assets.” If such assets were deemed to be impaired as a result of this measurement evaluation, the impairment that would be recognized is the amount by which the carrying amount of the asset exceeds fair value as determined on a discounted net cash flow basis. Assets are tested for impairment every three years or more frequently whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Circumstances that may prompt a test of recoverability may include a significant decrease in anticipated market price, an adverse change to the extent or manner in which an asset may be used or in its physical condition or other such events that may significantly change the value of the long-lived asset.Origen

The Company has a 20 percent investment in an affiliate that is reported under the equity method of accounting. Management performs an analysis to determine if the investment has experienced an other than temporary decline in value. Numerous factors are evaluated in accordance with published GAAP and ~~SEC staff guidance. Changes in the facts and circumstances evaluated, future adverse changes in market conditions or operating results of the affiliate may affect management’s analysis.~~

~~Notes and Accounts Receivable~~~~. The Company evaluates the recoverability of~~ its receivables whenever events occur or there are changes in circumstances such that management believes it is probable that it will be unable to collect all amounts due according to the contractual terms of the loan and lease agreements. The ability to collect notes receivable is measured based on the present value of the expected future cash flow discounted at the note’s effective interest rate or the fair value of the collateral if the note is collateral dependent. Receivables related to community rents are reserved when the Company believes that collection is less than probable.

~~Depreciation~~. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Useful lives are 30 years for land improvements and buildings, 7 to 15 years for furniture, fixtures and equipment, and 7 years for intangible assets.

~~Revenue Recognition~~~~. Rental income attributable to leases is recorded on a straight-line basis when earned from tenants. Leases~~affiliates have entered into ~~by tenants generally range from month-to-month to one year and are renewable by mutual agreement of~~ the ~~Company and the resident or, in some cases, as provided by state statute. Revenue from the sale of manufactured homes is recognized upon transfer of title at the closing of the sales transaction.~~

~~Capitalized Costs~~~~. The Company capitalizes certain costs (including interest and other costs) incurred in connection~~following transactions with the development, redevelopment, capital enhancement and leasing of its properties. Management is required to use professional judgment in determining whether such costs meet the criteria for immediate expense or capitalization. The amounts are dependent on the volume and timing of such activities and the costs associated with such activities. Maintenance, repairs and minor improvements to properties are expensed when incurred. Renovations and improvements to properties are capitalized and depreciated over their estimated useful lives and construction costs related to the development of new community or expansion sites are capitalized until the property is substantially complete. Costs incurred to renovate repossessed homes for the Company’s rental program are capitalized and costs incurred to refurbish the homes at turnover and repair the homes while occupied are expensed. Certain expenditures to dealers and residents related to obtaining lessees in our communities are capitalized and amortized over a seven year period based on the anticipated term of occupancy of a resident. Costs associated with implementing the Company’s computer systems are capitalized and amortized over the estimated useful lives of the related software and hardware.

~~Derivative Instruments and Hedging Activities~~. The Company has entered into three interest rate swap agreements to offset interest rate risk. The Company does not enter into derivative transactions for speculative purposes. The Company adjusts its balance sheet on an ongoing quarterly basis to reflect current fair market value of its derivatives. Changes in the fair value of derivatives are recorded each period in earnings or comprehensive income, as appropriate. The ineffective portion of the hedge is immediately recognized in earnings to the extent that the change in value of a derivative does not perfectly offset the change in value of the instrument being hedged. The unrealized gains and losses held in accumulated other comprehensive income will be reclassified to earnings over time and occurs when the hedged items are also recognized in earnings. The Company uses standard market conventions to determine the fair values of derivative instruments, including the quoted market prices or quotes from brokers or dealers for the same or similar instruments. All methods of assessing fair value result in a general approximation of value and such value may never actually be realized.

~~Income Taxes~~. The Company has elected to be taxed as a REIT as defined under Section 856(c) of the Internal Revenue Code of 1986, as amended. In order for the Company to qualify as a REIT, at least ninety-five percent (95%) of the Company’s gross income in any year must be derived from qualifying sources. As a REIT, the Company generally will not be subject to U.S. Federal income taxes at the corporate level if it distributes at least ninety percent (90%) of its REIT ordinary taxable income to its stockholders, which it fully intends to do. If the Company fails to qualify as a REIT in any taxable year, the Company will be subject to Federal income tax (including any applicable alternative minimum tax) on its taxable income at regular corporate rates. The Company remains subject to certain state and local taxes on its income and property as well as Federal income and excise taxes on its undistributed income.

The Company has certain subsidiaries that are taxed as regular corporations. Deferred tax assets or liabilities are recognized for temporary differences between the tax bases of non-REIT assets and liabilities and their carrying amounts in the financial statements and net operating loss carry forwards. Deferred tax assets and liabilities are measured using currently enacted tax rates. A valuation allowance is established if based on available evidence it is more likely than not that some portion or all of the deferred tax assets will not be realized.

~~Results of Operations~~

~~Comparison of year ended December 31, 2006, to year ended December 31, 2005~~

For the year ended December 31, 2006, loss from operations increased by $22.4 million from a loss of $6.1 million in 2005 to a loss of $28.5 million in 2006. The increase in loss was due to increased expenses of $22.7 million and increased loss from affiliate of $15.7 million, offset by increased revenues of $16.0 million as described in more detail below.

Income from real property increased by $7.3 million from $179.0 million to $186.3 million, or 4.1 percent, due to property acquisitions ($1.6 million), rent increases ($5.0 million) and other community revenues ($0.7 million).

Revenue from home sales increased by $1.8 million from $18.4 million to $20.2 million, or 9.8 percent. The Company sold 492 manufactured homes during the twelve months ended December 31, 2006 as compared to 425 sales during the same period in 2005. Additional revenue resulted from the increase in the number of homes sold and was partially offset by a 4.9 percent decrease in average sales price as consumer demand shifted to pre-owned homes.

Rental home revenue increased by $6.1 million from $9.1 million to $15.2 million, or 67.0 percent. The number of tenants in the Company’s rental program increased from 3,711 at December 31, 2005 to 4,576 at December 31, 2006, resulting in additional revenue of approximately $4.2 million. The remainder of the increase resulted from an increase in the average rental rate per home from $643 per month at December 31, 2005 to $686 per month at December 31, 2006.

Ancillary revenues, net, decreased by $0.4 million from $0.7 million to $0.3 million due to a non-refundable option payment received in 2005 ($0.2 million) and increased golf course management fees ($0.2 million).

Interest income decreased by $0.7 million from $4.4 million to $3.7 million, or 15.9 percent, due primarily to a decrease in interest earned on the Company’s short-term investments which were sold during 2006.

Other income increased by $1.7 million from a loss of $(0.7) million to income of $1.0 million due to an increase in brokerage commissions ($0.1 million), a decrease in unsuccessful acquisition expenses ($0.5 million), proceeds from a lawsuit settlement ($0.4 million) and an increase in other miscellaneous operating income ($0.7 million).

Property operating and maintenance expenses increased by $1.8 million from $45.1 million to $46.9 million, or 4.0 percent. The increase was due to acquisitions ($0.5 million), increases in utility costs ($1.5 million) and payroll and health insurance costs ($0.5 million), partially offset by decreases in repair and maintenance ($0.3 million) and miscellaneous other expenses ($0.4 million).

~~Real estate taxes increased by $0.7 million from $15.2 million to $15.9 million, or 4.6 percent, due to acquisitions ($0.2 million) and increases in assessments and tax rates ($0.5 million).~~

Cost of home sales increased by $1.8 million from $13.9 million to $15.7 million, or 12.9 percent due primarily to the increase in the number of homes sold. The Company sold 492 manufactured homes during the twelve months ended December 31, 2006 as compared to 425 sales during the same period in 2005. Gross profit margins decreased from 24.6 percent in 2005 to 22.4 percent in 2006 due to increased sales of pre-owned homes at lower margins.

Rental home operating and maintenance increased by $4.1 million from $7.4 million to $11.5 million due primarily to an increase in the number of tenants in the Company’s rental program. Additional information regarding the Company’s rental program is contained in the table below.

General and administrative expenses for real property increased by $1.9 million, from $14.5 million to $16.4 million, due to an increase in payroll and benefits ($1.8 million), state and local taxes ($0.2 million), directors fee ($0.1 million) and audit and accounting fees ($0.2 million). The payroll and benefit increase includes the accrual of annual performance based bonus incentives ($0.5 million) and recognition of expense related to performance-based restricted and phantom stock awards ($0.7 million). These increases were offset by a decrease in legal fees of $0.4 million.

~~General and administrative expenses for home sales and rentals increased by $0.1 million from $6.2 million to $6.3 million, or 1.6 percent due primarily to an increase in payroll and benefits.~~

~~Depreciation and amortization increased by $6.0 million from $54.3 million to $60.3 million, or 11.0 percent, due primarily to an increase in the total rental home portfolio.~~

Debt extinguishment expense of $0.5 million includes defeasance fees and other costs associated with extinguishing $45.0 million of secured notes. Deferred financing costs of $0.2 million related to this debt were expensed.

Interest expense, including interest on mandatorily redeemable debt, increased by $5.1 million from $60.0 million to $65.1 million, or 8.5 percent. Average debt increased by 4.0 percent and the remainder of the increase is due to higher variable rates.

~~Included in Equity loss from affiliate is an $18.0 million impairment to the carrying value of Origen.~~

~~Comparison of year ended December 31, 2005, to year ended December 31, 2004~~

For the year ended December 31, 2005, loss from operations decreased by $35.3 million from a loss of $41.5 million in 2004 to a loss of $6.2 million in 2005. The decrease was due to decreased expenses of $58.2 million, including a reduction in debt extinguishment costs of $51.6 million, deferred financing costs related to the extinguished debt of $5.6 million, and Florida storm damage of $1.0 million, and increased revenues of $7.6 million offset by increased depreciation and other miscellaneous expenses of $29.7 million and an increase in equity loss from affiliate of $0.8 million as described in more detail below.

~~Income from real property increased by $11.9 million from $167.1 million to $179.0 million, or 7.1 percent, due to property acquisitions, rent increases, and other community revenues.~~

~~Revenue from home sales increased by $0.7 million from $17.7 million to $18.4 million, or 4.0 percent. The increase was due to higher average sales prices of new homes.~~

Rental home revenue increased by $4.5 million from $4.6 million to $9.1 million, or 97.8 percent. The number of tenants in the Company’s rental program increased from 1,933 at December 31, 2004, to 3,711 at December 31, 2005, resulting in additional revenue of approximately $3.4 million. The remainder of the increase resulted from an increase in the average rental rate per home.

~~Interest income decreased by $2.2 million from $6.6 million to $4.4 million, or 33.3 percent, due primarily to a decrease in interest earning notes and receivables.~~

Other income decreased by $1.6 million from $0.9 million to $(0.7) million, due primarily to an increase in loss on disposal of assets of $0.9 million, an increase in expenses associated with failed acquisitions of $0.5 million and a decrease in other miscellaneous income of $0.2 million.

Property operating and maintenance expenses increased by $3.6 million from $41.5 million to $45.1 million, or 8.7 percent. The increase was due to increases in utility costs ($1.6 million), payroll expense ($0.9 million), repair and maintenance expense ($0.5 million), biennial corporate conference expense ($0.2 million), and miscellaneous other expenses ($0.4 million).

~~Real estate taxes increased by $1.4 million from $13.8 million to $15.2 million, or 10.1 percent due to increases in assessments and tax rates.~~

Cost of home sales decreased by $0.3 million from $14.2 million to $13.9 million, or 2.1 percent due primarily to the decrease in the number of homes sold offset by an increase in the average cost of homes. Overall home sales gross margins increased $1.1 million from $3.4 million to $4.5 million, or 32.4 percent.

Rental home operating and maintenance increased by $4.0 million from $3.4 million to $7.4 million due primarily to an increase in the number of tenants in the Company’s rental program. Additional information regarding the Company’s rental program is contained in the table following these results of operations.

General and administrative expenses for real property increased by $1.9 million from $12.6 million to $14.5 million, due to an increase in salaries, benefits and consulting expense ($1.5 million) and legal costs primarily associated with the SEC inquiry ($1.2 million) offset by a reduction in training expense ($0.4 million) and Michigan Single Business tax ($0.4 million).

General and administrative expenses for home sales and rentals decreased by $1.9 million from $8.1 million to $6.2 million, or 23.5 percent, due to decreases in federal income tax expense ($0.9 million), advertising expense ($0.5 million) and salaries, benefits and consulting ($0.6 million) offset by an increase in other miscellaneous expenses ($0.1 million).

Depreciation and amortization increased by $9.1 million from $45.2 million to $54.3 million, or 20.1 percent, due primarily to a change in the estimated service lives of homes in the Company’s rental program and an increase in the total rental home portfolio. The change in estimated useful lives was prospectively adopted during the first quarter of 2005.

Interest expense, including interest on mandatorily redeemable debt, increased by $11.8 million from $48.2 million to $60.0 million, or 24.5 percent, due to increased debt levels and higher interest rates on variable rate debt.

Debt extinguishment expense in 2004 of $51.6 million includes prepayment penalties, fees and other costs associated with extinguishing $345.0 million of unsecured notes. Deferred financing costs related to these notes and other debt extinguished were expensed.

~~Same Property Information~~

The following table reflects property-level financial information as of and for the years ended December 31, 2006 and 2005. The “Same Property” data represents information regarding the operation of communities owned as of January 1, 2005, and December 31, 2006. Site, occupancy, and rent data for those communities is presented as of the last day of each period presented. The “Total Portfolio” column differentiates from the “Same Property” column by including financial information for properties acquired after January 1, 2005, and new development communities.

Same Property

Total Portfolio

2006

2005

2006

2005

(in thousands)

(in thousands)

Income from real property

$
176,399

$
170,712

$
186,326

$
178,985

Property operating expenses:

Property operating and maintenance

35,898

34,947

46,916

45,091

Real estate taxes

15,465

14,912

15,860

15,173

Property operating expenses

51,363

49,859

62,776

60,264

Real property net operating income ⁽¹⁾

$
125,036

$
120,853

$
123,550

$
118,721

Number of properties

133

133

136

135

Developed sites

46,538

46,544

47,606

47,385

Occupied sites

37,506

⁽²
⁾

37,999

⁽²
⁾

37,906

⁽²
⁾

38,190

⁽²
⁾
Occupancy %

82.6
%
⁽³
⁾

83.9
%
⁽³
⁾

82.5
%
⁽³
⁾

83.7
%
⁽³
⁾
Weighted average monthly rent per site

$
368

⁽³
⁾
$
355

⁽³
⁾
$
368

⁽³
⁾
$
355

⁽³
⁾
Sites available for development

6,315

6,342

6,813

6,942

Sites planned for development in next year

25

99

25

99

⁽¹⁾ Investors in and analysts following the real estate industry utilize net operating income (“NOI”) as a supplemental performance measure. NOI is derived from revenues (determined in accordance with GAAP) minus property operating expenses and real estate taxes (determined in accordance with GAAP). NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (determined in accordance with GAAP) as an indication of the Company’s financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity; nor is it indicative of funds available for the Company’s cash needs, including its ability to make cash distributions. The Company believes that net income is the most directly comparable GAAP measurement to net operating income. Net income includes interest and depreciation and amortization which often have no effect on the market value of a property and therefore limit its use as a performance measure. In addition, such expenses are often incurred at a parent company level and therefore are not necessarily linked to the performance of a real estate asset. The Company believes that net operating income is helpful to investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. The Company uses NOI as a key management tool when evaluating performance and growth of particular properties and/or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization and non-property specific expenses such as general and administrative expenses, all of which are significant costs, and therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.

⁽²⁾~~Occupied sites include manufactured housing and permanent recreational vehicle sites, and exclude seasonal recreational vehicle sites.~~

⁽³⁾	~~Occupancy % and weighted average rent relates to manufactured housing sites, excluding both permanent and seasonal recreational vehicle sites.~~

On a same property basis, real property net operating income increased by $4.1 million from $120.9 million for the year ended December 31, 2005, to $125.0 million for the year ended December 31, 2006, or 3.5 percent. Income from real property increased by $5.7 million from $170.7 million to $176.4 million, or 3.3 percent, due primarily to increases in rents including water and property tax pass through. Property operating expenses increased by $1.5 million from $49.9 million to $51.4 million, or 3.0 percent, due to increases in real estate taxes ($0.6 million), payroll and health benefit costs ($0.6 million), utilities and other ($0.3 million).

~~Rental Program~~

~~The following table reflects additional information regarding the Company’s rental program for the years ended December 31, 2006, 2005 and 2004:~~

Year Ended December 31,

2006

2005

2004

(in thousands except for *)

Rental home revenue

$
15,174

$
9,084

$
4,558

Site rent included in Income from rental property

18,819

12,277

6,300

Rental program revenue

33,993

21,361

10,858

Expenses

Payroll and commissions

2,037

1,826

1,052

Repairs and refurbishment

4,938

3,190

1,375

Taxes and insurance

2,506

1,022

458

Other

2,004

1,334

483

Rental program operating and maintenance

11,485

7,372

3,368

Net operating income ⁽¹⁾

$
22,508

$
13,989

$
7,490

Number of occupied rentals, end of period*

4,576

3,711

1,933

Cost of occupied rental homes

$
135,861

$
109,214

$
51,540

Weighted average monthly rental rate per home and site*

$
686

$
643

$
579

⁽¹⁾~~See Note (1) following Same Property Information on page 38.~~

Net operating income from the rental program increased $8.5 million from $14.0 million in 2005 to $22.5 million in 2006 as a result of a $12.6 million increase in revenue offset by a $4.1 million increase in expenses. Revenues increased due to an increase in the weighted average monthly rental rate and an increase in the number of leased rental homes. Expenses were also impacted by the increase in the number of leased rental homes. A comparison of the year ended 2005 to the year ended 2004 results in similar increases in net operating income, revenue and expenses for the same reasons as noted in the comparison of the year ended 2006 to the year ended 2005.

~~Liquidity and Capital Resources~~

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

The Company expects to meet its short-term liquidity requirements through its working capital provided by operating activities, through its $115.0 million line of credit and through such other lines of credit that may be entered into. The Company considers these resources to be adequate to meet all operating requirements, including recurring capital improvements, routinely amortizing debt and other normally recurring expenditures of a capital nature, pay dividends to its stockholders to maintain qualification as a REIT in accordance with the Internal Revenue Code and make distributions to the Operating Partnership’s unitholders.

The Company plans to invest approximately $2 to $3 million in developments consisting of expansions to existing communities and the development of new communities during 2007. The Company expects to finance these investments by using net cash flows provided by operating activities and by drawing upon its line of credit.

The Company has invested $7.8 million in the acquisition of properties during 2006. The Company continuously seeks acquisition opportunities that meet the Company’s criteria for acquisition. Should such investment opportunities arise in 2007, the Company will finance the acquisitions though the temporary use of its line of credit until permanent secured financing can be arranged, through the assumption of existing debt on the properties or the issuance of certain equity securities.

During 2006, the Company acquired a manufactured housing community containing 227 sites in Oakland County, Michigan for $7.8 million and assumed $4.5 million of debt. The occupancy of this community is approximately 95.0 percent.

The Company has also invested approximately $35 million in the acquisition of homes primarily intended for its rental program during 2006. Expenditures for 2007 will be dependent upon the condition of the markets for repossessions and new home sales as well as rental homes.

Cash and cash equivalents decreased by $2.7 million to $3.2 million at December 31, 2006, compared to $5.9 million at December 31, 2005. Net cash provided by operating activities decreased by $6.8 million to $56.1 million for the year ended December 31, 2006, compared to $62.9 million for the year ended December 31, 2005.

The Company’s net cash flows provided by operating activities may be adversely impacted by, among other things: (a) the market and economic conditions in the Company’s markets; (b) lower occupancy rates of the Properties; (c) increased operating costs, including insurance premiums, real estate taxes and utilities, that cannot be passed on to the Company’s tenants; and (d) decreased sales or rentals of manufactured homes. See “Risk Factors.”

The Company has an unsecured line of credit facility with a maximum borrowing amount of $115 million, subject to certain borrowing base calculations, which bears interest at LIBOR + 1.75 percent and matures in September 2007, with a one-year optional extension. At December 31, 2006, $3.4 million of availability was used to back standby letters of credit and $25.2 million was available to be drawn under the facility based on the December 31, 2006, calculation of

borrowing base. The line of credit facility contains various leverage, debt service coverage, net worth maintenance and other customary covenants all of which the Company was in compliance with at December 31, 2006.

~~The Company’s primary long-term liquidity needs are principal payments on outstanding indebtedness. At December 31, 2006, the Company’s outstanding contractual obligations were as follows:~~

Payments Due By Period
(in thousands)

Contractual Cash Obligations

Total Due

1 year

2-3 years

4-5 years

After 5 years

Collateralized term loan - FNMA

$
385,299

$
3,776

$
8,093

$
8,928

$
364,502

Collateralized term loan - B of A

492,749

6,499

14,743

119,132

352,375

Mortgage notes, other

148,455

18,128

18,967

1,020

110,340

Line of credit

86,400

—

86,400

—

—

Redeemable Preferred OP Units

53,947

4,500

4,770

8,895

35,782

Operating leases

1,063

841

222

—

—

$
1,167,913

$
33,744

$
133,195

$
137,975

$
862,999

Interest expense is a material cash requirement of the Company and is expected to be in excess of $66.4 million for 2007, $64.7 million for 2008, $63.3 million for 2009, $60.8 million for 2010 and $57.2 million for 2011, based on the current debt levels, rates and maturities.

The Company anticipates meeting its long-term liquidity requirements, such as scheduled debt maturities, large property acquisitions, and Operating Partnership unit redemptions through the collateralization of a significant portion of its Properties. From time to time, the Company may also issue shares of its capital stock or preferred stock, issue equity units in the Operating Partnership or sell selected assets. The ability of the Company to finance its long-term liquidity requirements in such manner will be affected by numerous economic factors affecting the manufactured housing community industry at the time, including the availability and cost of mortgage debt, the financial condition of the Company, the operating history of the Properties, the state of the debt and equity markets, and the general national, regional and local economic conditions. See “Risk Factors”. If the Company is unable to obtain additional debt or equity financing on acceptable terms, the Company’s business, results of operations and financial condition will be adversely impacted.

At December 31, 2006, the Company’s debt to total capitalization approximated 63.7 percent (assuming conversion of all Common OP Units to shares of common stock). The debt has a weighted average maturity of approximately 7.0 years and a weighted average interest rate of 5.5 percent.

~~Capital expenditures for the years ended December 31, 2006 and 2005, included recurring capital expenditures of $6.9 million and $7.7 million, respectively.~~

Net cash used in investing activities was $47.8 million for the year ended December 31, 2006, compared to $33.8 million in the prior year. The difference is due to: decreased net proceeds from sale of short-term investments of $44.9 million; decreased proceeds from property and land disposition of $3.9 million; decreased repayments of notes receivables and officer’s notes, net of $5.3 million; offset by decreased investment in rental properties of $35.9 million; and increased proceeds from loans sold to Origen ~~of $4.2 million.~~

Net cash used in financing activities was $11.0 million for the year ended December 31, 2006, compared to $75.9 million in the prior year. The difference is primarily due to an increase in net proceeds from notes payable and other debt of $61.7 million, a $41.8 million decrease in payments to retire preferred operating partnership units, a $20.0 million reduction in funds used to purchase Company stock, and an increase in net proceeds from option exercises and the issuance of common stock and OP units, net of $3.3 million, offset by decreased borrowings on line of credit of $60.2 million, increased distributions of $0.5 million, and increased payments of deferred financing costs of $1.2 million.

~~Inflation~~

Most of the leases allow for periodic rent increases which provide the Company with the opportunity to achieve increases in rental income as each lease expires. Such types of leases generally minimize the risk of inflation to the Company.

~~Recent Accounting Pronouncements~~

~~On July 13, 2006, the~~ Financial, Accounting Standards Board issued Interpretation (FIN 48), Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109. FIN 48 prescribes a consistent recognition threshold and measurement standard, as well as clear criteria for subsequently recognizing, derecognizing and measuring tax positions for financial statement purposes. FIN 48 also requires expanded disclosure with respect to the uncertainty of income taxes. FIN 48 is effective for fiscal years beginning after December 15, 2006, and must therefore be adopted by the Company for its fiscal year ended December 31, 2007. Management is currently evaluating the impact of FIN 48.

In September 2006, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 108 (SAB 108). Due to diversity in practice among registrants, SAB 108 expresses SEC staff views regarding the process by which misstatements in financial statements are evaluated for purposes of determining whether financial statement restatement is necessary. SAB 108 is effective for fiscal years ending after November 15, 2006. SAB 108 did not have a material impact on our results from operations or financial position.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (SFAS No. 157). SFAS No. 157 establishes a common definition for fair value to be applied to US GAAP guidance requiring use of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently assessing the impact of SFAS No. 157 on its consolidated financial position and results of operations.

~~Other~~

~~Funds from operations~~Inc. (“~~FFO”~~Origen”) is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from sales of depreciable operating property, plus real estate-related depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. FFO is a non-GAAP financial measure that management believes is a useful supplemental measure of the Company’s operating performance. Management generally considers FFO to be a useful measure for reviewing comparative operating and financial performance because, by excluding gains and losses related to sales of previously depreciated operating real estate assets and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared year over year, reflects the impact to operations from trends in occupancy rates, rental rates and operating costs, providing perspective not readily apparent from net income. 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.

Because FFO excludes significant economic components of net income including depreciation and amortization, FFO should be used as an adjunct to net income and not as an alternative to net income. The principal limitation of FFO is that it does not represent cash flow from operations as defined by GAAP and is a supplemental measure of performance that does not replace net income as a measure of performance or net cash provided by operating activities as a measure of liquidity. In addition, FFO is not intended as a measure of a REIT’s ability to meet debt principal repayments and other cash requirements, nor as a measure of working capital. FFO only provides investors with an additional performance measure. Other REITS may use different methods for calculating FFO and, accordingly, the Company’s FFO may not be comparable to other REITs.

~~The following table reconciles net income to FFO and calculates FFO data for both basic and diluted purposes for the years ended December 31, 2006, 2005, 2004 (in thousands)~~:

~~SUN COMMUNITIES, INC.~~

~~RECONCILIATION OF NET LOSS TO FUNDS FROM OPERATIONS~~

~~(Amounts in thousands, except for per share/OP unit amounts)~~

2006

2005

2004

Net income (loss)

$
(24,968
) ⁽¹⁾
$
(5,452
)
$
(40,468
)
Adjustments:

Depreciation and amortization

62,148

56,902

45,589

Valuation adjustment ⁽²⁾

(280
)

430

528

Allocation of SunChamp losses ⁽³⁾

0

0

300

(Gain) loss on dispositions, net

908

156

(3,880
)
Income (loss) allocated to common minority interests

(3,248
)

(723
)

(5,364
)
Funds from operations (FFO)

$
34,560

$
51,313

$
(3,295
)

FFO - Continuing Operations

$
34,560

$
51,141

$
(3,628
)
FFO - Discontinued Operations

$
—

$
172

$
333

Weighted average common shares/OP Units outstanding:

Basic

19,958

20,121

20,792

Diluted

20,129

20,253

20,792

Continuing Operations:

FFO per weighted average Common Share/OP Unit - Basic

$
1.74

$
2.53

$
(0.17
)
FFO per weighted average Common Share/OP Unit - Diluted

$
1.72

$
2.53

$
(0.17
)

Discontinued Operations:

FFO per weighted average Common Share/OP Unit - Basic

$
—

$
0.01

$
0.01

FFO per weighted average Common Share/OP Unit - Diluted

$
—

$
0.01

$
0.01

Total Operations:

FFO per weighted average Common Share/OP Unit - Basic

$
1.74

$
2.54

$
(0.16
)
FFO per weighted average Common Share/OP Unit - Diluted

$
1.72

$
2.54

$
(0.16
)

⁽¹⁾Net loss for the year ended December 31, 2006 includes an $18.0 million reduction in the carrying value of the Company’s investment in affiliate (Origen). Net loss, FFO and FFO per diluted share/OP unit for the year ended December 31, 2006, adjusted to exclude this impairment, is $(9.0) million, $52.6 million and $2.61 per diluted share/OP unit, respectively.

⁽²⁾ The Company entered into three interest rate swaps and an interest rate cap agreement. The valuation adjustment reflects the theoretical noncash profit and loss were those hedging transactions terminated at the balance sheet date. As the Company has no expectation of terminating the transactions prior to maturity, the net of these noncash valuation adjustments will be zero at the various maturities. As any imperfection related to hedging correlation in these swaps is reflected currently in cash as interest, the valuation adjustments reflect volatility that would distort the comparative measurement of FFO and on a net basis approximate zero. Accordingly, the valuation adjustments are excluded from FFO. The valuation adjustment is included in interest expense.

⁽³⁾The Company acquired the equity interest of another investor in SunChamp in December 2002. Consideration consisted of a long-term note payable at net book value. Although the adjustment for the allocation of the SunChamp losses (based on SunChamp as a stand-alone entity) is not reflected in the accompanying financial statements, management believes that it is appropriate to provide for this adjustment because the Company’s payment obligations with respect to the note are subordinate in all respects to the return of the members’ equity (including the gross book value of the acquired equity) plus a preferred return. As a result, the losses that are allocated to the Company from SunChamp as a stand-alone entity under generally accepted accounting principles are effectively reallocated to the note for purposes of calculating FFO. A situation such as this is not contemplated in the NAREIT definition of FFO due to the unique circumstances of the transaction. Although not comparable to the precise NAREIT definition, the Company believes the inclusion of this item in its calculation of FFO to be appropriate as noted above.

~~ITEM 7A.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK~~

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

The Company has entered into three separate interest rate swap agreements and an interest rate cap agreement. One of the swap agreements fixes $25 million of variable rate borrowings at 4.84 percent for the period April 2003 through July 2009, another of the swap agreements fixes $25 million of variable rate borrowings at 5.28 percent for the period April 2003 through July 2012 and the third swap agreement, which is only effective for so long as 90-day LIBOR is 7 percent or less, fixes $25 million of variable rate borrowings at 3.88 percent for the period April 2003 through July 2007. The interest rate cap agreement has a cap rate of 11.79 percent, a notional amount of $152.4 million and a termination date of May 29, 2007. Each of the Company’s derivative contracts is based upon 90-day LIBOR.

The Company’s remaining variable rate debt totals $184.1 million as of December 31, 2006, which bears interest at Prime, various LIBOR or Fannie Mae Discounted Mortgage Backed Securities (“DMBS”) rates. If Prime, LIBOR, or DMBS increased or decreased by 1.0 percent during the years ended December 31, 2006 and 2005, the Company believes its interest expense would have increased or decreased by approximately $1.9 million and $1.3 million, respectively, based on the $192.4 million and $131.2 million average balance outstanding under the Company’s variable rate debt facilities for the year ended December 31, 2006 and 2005, respectively.

Additionally, the Company had a $13.5 million LIBOR based variable rate mortgage receivable as of December 31, 2006 and 2005. If LIBOR increased or decreased by 1.0 percent during the years ended December 31, 2006 and 2005, the Company believes interest income would have increased or decreased by approximately $0.1 million based on the $13.5 million and $14.1 million average balance outstanding on all variable rate notes receivable for the year ended December 31, 2006 and 2005, respectively.

~~ITEM 8.~~

~~FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA~~•

~~Financial statements and supplementary data are filed herewith under Item 15.~~

~~ITEM 9.~~

~~CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE~~Capital Investment in Origen:

~~Not applicable~~

~~ITEM 9A.~~In the 2003 recapitalization of Origen, the Company purchased 5,000,000 shares of Origen common stock for $50.0 million and Shiffman Origen LLC (which is owned by the Milton M. Shiffman Spouse’s Marital Trust, Gary A. Shiffman (the Company’s Chief Executive Officer), and members of Mr. Shiffman’s family) purchased 1,025,000 shares of Origen common stock for approximately $10.3 million.

~~CONTROLS AND PROCEDURES~~

~~Evaluation of Disclosure Controls and Procedures~~

The Company’s management is responsible for establishing and maintaining disclosure controls and procedures as defined in the rules promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer, Gary A. Shiffman, and Chief Financial Officer, Jeffrey P. Jorissen, the Company evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of December 31, 2006, Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2006 to ensure that information the Company is required to disclose in its filings with the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and to ensure that information required to be disclosed by the Company in the reports that it files under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

~~Design and Evaluation of Internal Control Over Financial Reporting~~

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, the Company has included a report of management’s assessment of the design and effectiveness of its internal controls as part of this Annual Report on Form 10-K for the fiscal year ended December 31, 2006. The Company’s independent registered public accounting firm also attested to, and reported on, management’s assessment of the effectiveness of internal control over financial reporting. Management’s report and the independent registered public accounting firm’s attestation report are included in the Company’s 2006 financial statements under the captions entitled “Management’s Report on Internal Control Over Financial Reporting” and “Report of Independent Registered Public Accounting Firm” and are incorporated herein by reference.

~~Changes in Internal Control Over Financial Reporting~~

There have been no changes in the Company’s internal control over financial reporting during the quarterly period ended December 31, 2006 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~ITEM 9B.~~

~~OTHER INFORMATION~~

~~Not applicable~~

~~PART III~~

~~The information required by~~ ~~Items 10, 11, 12, 13, and 14~~ ~~will be included in the Company’s proxy statement for its 2006 Annual Meeting of Shareholders, and is incorporated herein by reference.~~

~~PART IV~~

~~ITEM 15.~~

~~EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K~~

~~(a)~~•

Board Membership:Gary A. Shiffman is a member of the board of directors of Origen and Arthur A. Weiss, a director of the Company, is a trustee of the Milton M. Shiffman Spouse’s Marital Trust.

•

Loan Servicing Agreement:The ~~following documents are filed herewith as part~~Company previously had a loan servicing agreement with Origen Servicing, Inc., a wholly-owned subsidiary of ~~this Form 10-K:~~Origen, which serviced our portfolio of manufactured home loans.

•

Loan Origination, Sale and Purchase Agreement:Origen agreed to fund loans that met the Company’s underwriting guidelines and then transfer those loans to the Company pursuant to a Loan Origination, Sale and Purchase Agreement. The Company paid Origen a fee of $550 per loan pursuant to a Loan Origination, Sale and Purchase Agreement which totaled approximately $0.2 million during 2008. The Company purchased loans, at par, from Origen which totaled approximately $12.4 million during 2008.

•

Purchase of Repossessed Manufactured Homes:The Company also purchased $0.6 million of repossessed manufactured homes located within its communities that were owned by Origen during 2008.

•

Miscellaneous:With the sale of Origen’s servicing platform assets to Green Tree Servicing LLC, the Company engaged a different entity to continue the servicing of the manufactured home loans. In order to transfer the manufactured home loan servicing contract to a different service provider, the Company paid Origen a fee of $0.3 million.

~~(1) A list~~Lease of Principal Executive Offices

Gary A. Shiffman, together with certain family members, indirectly owns a 21 percent equity interest in American Center LLC, the entity from which we lease office space for our principal executive offices. Arthur A. Weiss owns a 0.75 percent indirect interest in American Center LLC. This lease was for an initial term of five years, beginning May 1, 2003, with the right to extend the lease for an additional five year term. On July 30, 2007, the Company exercised its option to extend its lease for its executive offices. The extension was for a period of five years commencing on May 1, 2008. On August 8, 2008, the Company modified its lease agreement to extend the term of the ~~financial statements required~~lease until August 31, 2015, with an option to renew for an additional five years. The base rent for the extended term through August 31, 2015, will continue to be ~~filed~~the same as the rent payable as of the current term. The current annual base rent under the current lease is $21.25 per square foot (gross). Mr. Shiffman and Mr. Weiss may have a ~~part~~conflict of interest with respect to their obligations as an officer and/or director of the Company and their ownership interest in American Center LLC.

Loans to Chief Executive Officer

In 1995, the Company issued Gary A. Shiffman, its Chief Executive Officer and President, 400,000 shares of common stock for $8,650,000 (the “Purchase Price”). The Purchase Price is evidenced by three (3) separate 10-year promissory notes that bear interest at a rate equal to six months’ LIBOR plus 175 basis points, with a maximum interest rate of 9% per annum and a minimum interest rate of 6% per annum (the “Promissory Notes”). Two of the Promissory Notes (with an initial aggregate principal amount of approximately $7.6 million) are secured by approximately 211,000 shares of common stock of the Company held by Mr. Shiffman (the “Secured Shares”) and/or 99,000 common partnership units in Sun Communities Operating Limited Partnership (the “Secured Units”) and the last Promissory Note (with an initial principal amount of approximately $1.0 million) is unsecured but fully recourse to Mr. Shiffman. Mr. Shiffman’s personal liability on the secured Promissory Notes is limited to all accrued interest on such notes plus fifty percent (50%) of the deficiency, if any, after application of the proceeds from the sale of the Secured Shares and/or the Secured Units to the then outstanding principal balance of the Promissory Notes. The Promissory Notes provide for quarterly interest only payments and provide that all cash distributions and dividends paid to Mr. Shiffman on the Secured Shares and the Secured Units (the “Distributions”) will first be applied toward the accrued and unpaid interest under the Promissory Notes and sixty percent (60%) of the remainder of the Distributions, if any, will be applied toward the outstanding principal balance of the Promissory Notes.

In April 1997, the Company loaned Mr. Shiffman an additional $2,600,391 on terms substantially identical to the terms of the other loan to Mr. Shiffman, as described above, and such loan is secured by approximately 62,000 shares of common stock of the Company held by Mr. Shiffman (the promissory notes evidencing this ~~Form 10-K~~loan, together with the Promissory Notes, are hereinafter referred to as the “Shiffman Notes”).

On July 15, 2002, the due date of the Shiffman Notes was extended such that one-third of the principal balance becomes due on December 31, 2008, an additional one-third of the principal balance becomes due on December 31, 2009 and the balance of the Shiffman Notes becomes due on December 31, 2010.

The largest aggregate indebtedness outstanding under the Shiffman Notes since January 1, 2008 was approximately $8.7 million. As of March 15, 2009, the amount outstanding under the Shiffman Notes was approximately $5.4 million.

Legal Counsel

During 2008, JRH&W acted as the Company’s general counsel and represented the Company in various matters. Arthur A. Weiss, a director of the Company, is ~~shown~~the Chairman of the Board of Directors and a shareholder of such firm. The Company incurred legal fees and expenses of approximately $1.0 million in 2008 in connection with services rendered by JRH&W.

Tax Consequences Upon Sale of Properties

Gary A. Shiffman holds limited partnership interests in the ~~“Index~~Operating Partnership which were received in connection with the contribution of 24 properties (four of which have been sold) from partnerships previously affiliated with him (the “Sun Partnerships”). Prior to any redemption of these limited partnership interests for our common stock, Mr. Shiffman will have tax consequences different from those of us and our public stockholders on the sale of any of the Sun Partnerships. Therefore, Mr. Shiffman and the Company may have different objectives regarding the appropriate pricing and timing of any sale of those properties.

Policies and Procedures for Approval of Related Party Transactions

No executive officer or director of the Company (or any family member or affiliate of such executive officer or director) may enter into any transaction or arrangement with the Company that reasonably could be expected to give rise to a conflict of interest without the prior approval of the Nominating and Corporate Governance Committee. Any such transaction or arrangement must be promptly reported to the ~~Consolidated Financial Statements~~Nominating and ~~Financial Statement Schedule” filed herewith.~~Governance Committee or the full Board. Any such disclosure provided by an executive officer or director is reviewed by the Nominating and Corporate Governance Committee and approved or disapproved. In determining whether to approve such a transaction or arrangement, the Nominating and Corporate Governance Committee takes into account, among other factors, whether the transaction was on terms no less favorable to the Company than terms generally available to third parties and the extent of the executive officer’s or director’s involvement in such transaction or arrangement.

~~(2) A list~~The current policy was adopted and approved in 2004. All related party transactions disclosed above were approved by either the Nominating and Corporate Governance Committee or the full Board.

Item 14

Principal Accounting Fees and Services

Fees

Aggregate fees for professional services rendered by Grant Thornton, LLP, the Company’s independent auditors, for the fiscal years ended December 31, 2008 and 2007 were as follows:

Category	FYE 12/31/2008		FYE 12/31/2007
Audit Fees: For professional services rendered for the audit of the Company’s financial statements, the audit of internal controls relating to Section 404 of the Sarbanes-Oxley Act, the reviews of the quarterly financial statements and consents	$	419,120	$	407,310
Audit-Related Fees: For professional services rendered for accounting assistance with new accounting standards and potential transactions and other SEC related matters	$	41,000	$	55,789
Tax Fees	$	—	$	—
All Other Fees	$	—	$	—

Auditor Fees Policy

The Audit Committee has a policy concerning the pre-approval of ~~the financial statement schedules required~~audit and non-audit services to be ~~filed as a part of this Form 10-K is shown in~~provided by the ~~“Index~~Company’s independent auditors. The policy requires that all services provided by the independent auditor to the ~~Consolidated Financial Statements~~Company, including audit services, audit-related services, tax services and ~~Financial Statement Schedule” filed herewith.~~

~~(3) A list~~other services, must be pre-approved by the Audit Committee. In some cases, pre-approval is provided by the full Audit Committee for up to a year, and relates to a particular category or group of services and is subject to a particular budget. In other cases, specific pre-approval is required. The Audit Committee approved all audit and non-audit related services provided to the ~~exhibits required~~Company by ~~Item 601 of Regulation S-K to be filed as a part of this Form 10-K is shown on~~Grant Thornton during the ~~“Exhibit Index” filed herewith.~~2008 fiscal year.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~Date: March 15, 2007~~		SUN COMMUNITIES, INC., a Maryland corporation
Dated: March 30, 2009		By:	/s/ Karen J. Dearing
	~~By: /s/ Gary A. Shiffman~~
	~~Gary A. Shiffman, Chief Executive Officer~~

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

~~Name~~

~~Title~~

~~Date~~

~~/s/ Gary A. Shiffman~~

~~Gary A. Shiffman~~

~~Chief Executive Officer, President and Chairman of the Board of Directors~~

~~March 15, 2007~~

~~/s/ Jeffrey P. Jorissen~~

~~Jeffrey P. Jorissen~~

Karen J. Dearing, Executive Vice President,

Chief Financial Officer, ~~Treasurer,~~ Secretary and ~~Principal Accounting Officer~~

~~March 15, 2007~~

~~/s/ Paul D. Lapides~~

~~Paul D. Lapides~~

~~Director~~

~~March 15, 2007~~

~~/s/ Ted J. Simon~~

~~Ted J. Simon~~

~~Director~~

~~March 15, 2007~~

~~/s/ Clunet R. Lewis~~

~~Clunet R. Lewis~~

~~Director~~

~~March 15, 2007~~

~~/s/ Ronald L. Piasecki~~

~~Ronald L. Piasecki~~

~~Director~~

~~March 15, 2007~~

~~/s/ Arthur A. Weiss~~

~~Arthur A. Weiss~~

~~Director~~

~~March 15, 2007~~

~~/s/ Robert H. Naftaly~~

~~Robert H. Naftaly~~

~~Director~~

~~March 15, 2007~~Treasurer

EXHIBIT INDEX

Exhibit
Number

Description
Method of
Filing

2.1
Form of Sun Communities, Inc.’s Common Stock Certificate
(1)
3.1
Amended and Restated Articles of Incorporation of Sun Communities, Inc
(1)
3.2
Bylaws of Sun Communities, Inc.
(2)
3.3
Articles Supplementary, dated October 16, 2006
(20)
3.4
Amendment to Bylaws, dated October 16, 2006
(20)
4.1
Indenture, dated as of April 24, 1996, among Sun Communities, Inc., Sun Communities Operating Limited Partnership (the “Operating Partnership”) and Bankers Trust Company, as Trustee
(3)
4.2
Form of Note for the 2001 Notes
(3)
4.3
Form of Note for the 2003 Notes
(3)
4.4
First Supplemental Indenture, dated as of August 20, 1997, by and between the Operating Partnership and Bankers Trust Company, as Trustee
(7)
4.5
Form of Medium-Term Note (Floating Rate)
(7)
4.6
Form of Medium-Term Note (Fixed Rate)
(7)
4.7
Articles Supplementary of Board of Directors of Sun Communities, Inc. Designating a Series of Preferred Stock and Fixing Distribution and other Rights in such Series
(9)
4.8
Articles Supplementary of Board of Directors of Sun Communities, Inc. Designating a Series of Preferred Stock
(11)
10.1
Second Amended and Restated Agreement of Limited Partnership of Sun Communities Operating Limited Partnership
(6)
10.2
Second Amended and Restated 1993 Stock Option Plan
(10)
10.3
Amended and Restated 1993 Non-Employee Director Stock Option Plan
(6)
10.4
Form of Stock Option Agreement between Sun Communities, Inc. and certain directors, officers and other individuals#
(1)
10.5
Form of Non-Employee Director Stock Option Agreement between Sun Communities, Inc. and certain directors#
(4)
10.6
Form of Restricted Stock Award Agreement#
(19)
10.7
Amended and Restated Loan Agreement between Sun Communities Funding Limited Partnership and Lehman Brothers Holdings Inc.
(7)
10.8
Amended and Restated Loan Agreement among Miami Lakes Venture Associates, Sun Communities Funding Limited Partnership and Lehman Brothers Holdings Inc.
(7)
10.9
Form of Indemnification Agreement between each officer and director of Sun Communities, Inc. and Sun Communities, Inc.
(7)
10.10
Loan Agreement among the Operating Partnership, Sea Breeze Limited Partnership and High Point Associates, LP.
(7)
10.11
Option Agreement by and between the Operating Partnership and Sea Breeze Limited Partnership
(7)
10.12
Option Agreement by and between the Operating Partnership and High Point Associates, LP
(7)
10.13
Stock Pledge Agreement between Gary A. Shiffman and the Operating Partnership for 94,570 shares of Common Stock
(5)
10.14
Stock Pledge Agreement between Gary A. Shiffman and the Operating Partnership for 305,430 shares of Common Stock
(5)
10.15
Stock Pledge Agreement between Gary A. Shiffman and the Operating Partnership with respect to 80,000 shares of Common Stock
(7)
10.16
Employment Agreement between Sun Communities, Inc. and Gary A. Shiffman, dated as of January 1, 2005#
(17)

Exhibit Number	Description	Method of Filing
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	(1)
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	(2)
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	(2)
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	(2)
99.1	Financial Statements of Origen Financial, Inc. for the year ended December 31, 2008	(2)

10.17
Employment Agreement between Sun Communities, Inc. and Jeffrey P. Jorissen, dated as of January 1, 2005#
(17)
10.18
Employment Agreement by and between Brian W. Fannon and Sun Communities, Inc., dated as of January 1, 2005#
(17)

10.19
Long Term Incentive Plan
(7)
10.20
Sun Communities, Inc. 1998 Stock Purchase Plan#
(9)
10.21
Rights Agreement between Sun Communities, Inc. and State Street Bank and Trust Company, dated April 24, 1998
(8)
10.22
One Hundred Third Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership
(11)
10.23
One Hundred Eleventh Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership
(12)
10.24
One Hundred Thirty-Sixth Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership
(12)
10.25
One Hundred Forty-Fifth Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership
(12)
10.26
One Hundred Seventy-Second Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership
(19)
10.27
Restricted Stock Award Agreement between Sun Communities, Inc. and Gary A. Shiffman, dated May 10, 2004#
(19)
10.28
First Amendment to Restricted Stock Award Agreement between Sun Communities, Inc., and Gary A. Shiffman#
(19)
10.29
Restricted Stock Award Agreement between Sun Communities, Inc. and Jeffrey P. Jorissen, dated May 10, 2004#
(19)
10.30

First Amendment to Restricted Stock Award Agreement between Sun Communities, Inc. and Jeffrey P. Jorissen#
(19)
10.31
Form of Loan Agreement dated June 9, 2004 by and among Sun Candlewick LLC, Sun Silver Star LLC and Aspen-Holland Estates, LLC, as Borrowers, and Bank of America, N.A., as Lender
(15)
10.32
Schedule identifying substantially identical agreements to Exhibit 10.31
(15)
10.33
Form of Loan Agreement dated June 9, 2004 by and between Sun Pool 8 LLC, as Borrower, and Bank of America, N.A., as Lender
(15)
10.34
Schedule identifying substantially identical agreements to Exhibit 10.33
(15)
10.35
Form of Loan Agreement dated June 9, 2004 by and between Sun Continental Estates LLC as Borrower, and Bank of America, N.A., as Lender
(15)
10.36
Schedule identifying substantially identical agreements to Exhibit 10.35
(15)
10.37
Form of Loan Agreement dated June 9, 2004 by and between Sun Indian Creek LLC, as Borrower, and Bank of America, N.A., as Lender
(15)
10.38
Schedule identifying substantially identical agreements to Exhibit 10.37
(15)
10.39
Amended And Restated Master Credit Facility Agreement dated April 28, 2004 by and among Sun Secured Financing LLC, Aspen Ft. Collins Limited Partnership, Sun Secured Financing Houston Limited Partnership, Sun Communities Finance, LLC, Sun Holly Forest LLC, Sun Saddle Oak LLC, as Borrowers, and Arcs Commercial Mortgage Co., L.P., as Lender
(15)
10.40
Appendix I (definitions) to Amended And Restated Master Credit Facility Agreement dated April 28, 2004 by and among Sun Secured Financing LLC, Aspen Ft. Collins Limited Partnership, Sun Secured Financing Houston Limited Partnership, Sun Communities Finance, LLC, Sun Holly Forest LLC, Sun Saddle Oak LLC, as Borrowers, and Arcs Commercial Mortgage Co., L.P., as Lender
(15)
10.41
Fixed Facility Note dated April 5, 2004 made by Sun Secured Financing LLC, Aspen – Ft. Collins Limited Partnership and Sun Secured Financing Houston Limited Partnership, in favor of Arcs Commercial Mortgage Co., L.P., in the original principal amount of $77,362,500
(15)

10.42
Fixed Facility Note dated April 28, 2004 made by Sun Secured Financing LLC, Sun Secured Financing Houston Limited Partnership, Aspen – Ft. Collins Limited Partnership, Sun Communities Finance LLC, Sun Holly Forest LLC and Sun Saddle Oak LLC, in favor of Arcs Commercial Mortgage Co., L.P., in the original principal amount of $100,000,000
(15)
10.43
Variable Facility Note dated April 28, 2004 made by Sun Secured Financing LLC, Sun Secured Financing Houston Limited Partnership, Aspen – Ft. Collins Limited Partnership, Sun Communities Finance LLC, Sun Holly Forest LLC and Sun Saddle Oak LLC, in favor of Arcs Commercial Mortgage Co., L.P., in the original principal amount of $60,275,000
(15)
10.44
Fourth Amended and Restated Variable Facility Note dated April 28, 2004 made by Sun Secured Financing LLC, Sun Secured Financing Houston Limited Partnership, Aspen – Ft. Collins Limited Partnership, Sun Communities Finance LLC, Sun Holly Forest LLC and Sun Saddle Oak LLC, in favor of Arcs Commercial Mortgage Co., L.P., in the original principal amount of $152,362,500
(15)
10.45
Credit Agreement, dated September 30, 2004, among the Company, the Operating Partnership, Standard Federal Bank National Association, LaSalle Bank National Association and other lenders
(16)
10.46
Second Amended and Restated Promissory Note (Secured), dated as of July 15, 2002, made by Gary A. Shiffman in favor of the Operating Partnership
(13)

10.47
First Amended and Restated Promissory Note (Unsecured), dated as of July 15, 2002, made by Gary A. Shiffman in favor of the Operating Partnership
(13)
10.48
First Amended and Restated Promissory Note (Secured), dated as of July 15, 2002, made by Gary A. Shiffman in favor of the Operating Partnership
(13)
10.49
Second Amended and Restated Promissory Note (Unsecured), dated as of July 15, 2002, made by Gary A. Shiffman in favor of the Operating Partnership
(13)
10.50
Second Amended and Restated Promissory Note (Secured), dated as of July 15, 2002, made by Gary A. Shiffman in favor of the Operating Partnership
(13)
10.51
Lease, dated November 1, 2002, by and between the Operating Partnership as Tenant and American Center LLC as Landlord
(14)
10.52
Concurrent Private Placement Agreement dated October 8, 2003 among Sun OFI, Inc., Origen Financial, Inc., and the Purchasers (as defined therein)
(18)
10.53
Registration Rights Agreement dated as of October 8, 2003 among Sun OFI, Inc., Origen Financial, Inc., Lehman Brothers Inc., on behalf of itself and as agent for the investors listed on Schedule A thereto and those persons listed on Schedule B thereto
(18)
10.54
Agreement for Wholesale Financing, dated March 1, 2006, by and between Sun Home Services, Inc. and Textron Financial Corporation
(21)
10.55
Promissory Note dated July 10, 2006 made by Sun Villa MHC LLC in favor of ARCS Commercial Mortgage Co., L.P., in the original principal amount of $18,300,000
(22)
10.56
Promissory Note dated July 10, 2006 made by Sun Countryside Atlanta LLC in favor of ARCS Commercial Mortgage Co., L.P., in the original principal amount of $12,950,000
(22)
10.57
Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated July 10, 2006, made by Sun Villa MHC LLC in favor of ARCS Commercial Mortgage Co., L.P.
(22)

10.58
Deed to Secure Debt and Security Agreement dated July 10, 2006 made by Sun Countryside Atlanta LLC in favor of ARCS Commercial Mortgage Co., L.P.
(22)
21.1
List of Subsidiaries of Sun Communities, Inc.
(23)
23.1
Consent of Grant Thornton LLP
(23)
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(23)
31.2
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(23)
32.1
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(23)

(1)

~~Incorporated by reference to Sun Communities, Inc.’s Registration Statement No. 33-69340.~~Filed herewith.

(2)

Incorporated by reference to ~~Sun Communities,~~Origen Financial, Inc.’s Annual Report on Form 10-K for the year ended December 31, ~~1995.~~

~~(3)~~

~~Incorporated by reference to Sun Communities, Inc.’s Current Report~~2008 (as filed with the Securities and Exchange Commission on ~~Form 8-K dated April 24, 1996.~~

~~(4)~~

~~Incorporated by reference to Sun Communities, Inc.’s Registration Statement No. 33-80972.~~

~~(5)~~

~~Incorporated by reference to Sun Communities, Inc.’s Quarterly Report on Form 10-K for the quarter ended September 30, 1995.~~

~~(6)~~

~~Incorporated by reference to Sun Communities, Inc.’s Annual Report on Form 10-K for the year ended December 31, 1996.~~

~~(7)~~

~~Incorporated by reference to Sun Communities, Inc.’s Annual Report on Form 10-K for the year ended December 31, 1997.~~

~~(8)~~

~~Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-A dated May~~March 27, ~~1998.~~

~~(9)~~

~~Incorporated by reference to Sun Communities, Inc.’s Annual Report on Form 10-K for the year ended December 31, 1998.~~

~~(10)~~

~~Incorporated by reference to Sun Communities, Inc.’s Proxy Statement, dated April 20, 1999~~

~~(11)~~

~~Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K dated October 14, 1999.~~

~~(12)~~

~~Incorporated by reference to Sun Communities, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2001.~~

~~(13)~~

~~Incorporated by reference to Sun Communities, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2002.~~

~~(14)~~

~~Incorporated by reference to Sun Communities, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2002, as amended.~~

~~(15)~~

~~Incorporated by reference to Sun Communities, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004.~~

~~(16)~~

~~Incorporated by reference to Sun Communities, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004.~~

~~(17)~~

~~Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K dated February 23, 2005.~~

~~(18)~~

~~Incorporated by reference to Origen Financial, Inc.’s Registration Statement on Form S-11, No. 333-112516~~

~~(19)~~

~~Incorporated by reference to Sun Communities, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2004.~~

~~(20)~~

~~Incorporated by reference to Sun Communities, Inc.’s Current Report on Form 8-K dated October 19, 2006~~

~~(21)~~

~~Incorporated by reference to Sun Communities, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2006~~

~~(22)~~

~~Incorporated by reference to Sun Communities, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006~~

~~(23)~~

~~Filed herewith.~~

#	~~Management contract or compensatory plan or arrangement.~~

~~SUN COMMUNITIES, INC.~~2009)

~~INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL~~

~~STATEMENT SCHEDULE~~

	~~Page~~
~~Management’s Report on Internal Control Over Financial Reporting~~	~~F-2~~
~~Reports of Independent Registered Public Accounting Firm~~	~~F-3 – F-5~~
~~Financial Statements:~~
~~Consolidated Balance Sheets as of December 31, 2006 and 2005~~	~~F-6~~
~~Consolidated Statements of Operations~~ ~~for the Years Ended December 31, 2006, 2005 and 2004~~	~~F-7~~
~~Consolidated Statements of Comprehensive Loss~~ ~~for the Years Ended December 31, 2006, 2005 and 2004~~	~~F-8~~
~~Consolidated Statements of Stockholders’ Equity~~ ~~for the Years Ended December 31, 2006, 2005 and 2004~~	~~F-8~~
~~Consolidated Statements of Cash Flows~~ ~~for the Years Ended December 31, 2006, 2005 and 2004~~	~~F-9~~
~~Notes to Consolidated Financial Statements~~	~~F-10 – F-34~~
~~Schedule III - Real Estate and Accumulated Depreciation~~	~~F-35 – F-38~~

~~F-1~~

~~Management’s Report on Internal Control Over Financial Reporting~~

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

~~pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;~~

~~provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles;~~

~~provide reasonable assurance that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and~~

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material adverse effect on the financial statements.

All internal control systems, no matter how well designed, have inherent limitations and can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2006. In making this assessment, management used the criteria for effective internal control over financial reporting set forth in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management determined that, as of December 31, 2006, the Company’s internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Grant Thornton LLP, an independent registered public accounting firm, has issued an attestation report on management’s assessment of internal control over financial reporting as of December 31, 2006, and their report is included herein.

~~F-2~~

~~Report of Independent Registered Public Accounting Firm~~

~~Board of Directors and Stockholders~~

~~Sun Communities, Inc.~~

We have audited management’s assessment, included in the accompanying Management’s Report on Internal Control over Financial Reporting, that Sun Communities, Inc. and subsidiaries (the Company) maintained effective internal control over financial reporting as of December 31, 2006, based on criteria established in ~~Internal Control – Integrated Framework~~ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that the Company maintained effective internal control over financial reporting as of December 31, 2006, is fairly stated, in all material respects, based on criteria established in ~~Internal Control – Integrated Framework~~ issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in ~~Internal Control – Integrated~~

~~F-3~~

~~Framework~~ ~~issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).~~

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Sun Communities, Inc. and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2006, and our report dated March 15, 2007, expressed an unqualified opinion on those financial statements.

~~/s/ GRANT THORNTON LLP~~

~~Southfield, Michigan~~

~~March 15, 2007~~

~~F-4~~

~~Report of Independent Registered Public Accounting Firm~~

~~Board of Directors and Stockholders~~

~~Sun Communities, Inc.~~

We have audited the accompanying consolidated balance sheets of Sun Communities, Inc. and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2006. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sun Communities, Inc. and subsidiaries as of December 31, 2006 and 2005, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2006 in conformity with accounting principles generally accepted in the United States of America.

~~As discussed in Note 6 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standard No. 123(R), “Share-Based Payments”, effective January 1, 2006.~~

Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. Schedule III is presented for the purpose of additional analysis and is not a required part of the basic consolidated financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Sun Communities, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 15, 2007, expressed an unqualified opinion.

~~/s/ GRANT THORNTON LLP~~

~~Southfield, Michigan~~

~~March 15, 2007~~

~~F-5~~

~~SUN COMMUNITIES, INC.~~

~~CONSOLIDATED BALANCE SHEETS~~

~~DECEMBER 31, 2006 AND 2005~~

~~(amounts in thousands)~~

2006

2005

ASSETS

Investment property, net

$
1,161,649

$
1,161,820

Cash and cash equivalents

3,183

5,880

Inventory of manufactured homes

12,082

17,105

Investment in affiliate

29,319

46,352

Notes and other receivables

41,407

41,134

Other assets

42,099

48,245

Total assets

$
1,289,739

$
1,320,536

LIABILITIES

Debt

$
1,080,450

$
1,050,168

Line of credit

86,400

73,300

Other liabilities

31,301

32,267

Total liabilities

1,198,151

1,155,735

Minority interest

12,391

21,544

STOCKHOLDERS’ EQUITY

Preferred stock, $.01 par value, 10,000 shares
authorized, none issued

$
—

$
—

Common stock, $.01 par value, 90,000 shares
authorized, 20,028 and 19,814 issued
in 2006 and 2005, respectively

200

198

Additional paid-in capital

452,882

460,568

Officer’s notes

(9,083
)

(9,427
)
Unearned compensation

—

(13,187
)
Accumulated comprehensive earnings

820

532

Distributions in excess of accumulated earnings

(302,022
)

(231,827
)
Treasury stock, at cost, 1,802 shares in 2006 and 2005

(63,600
)

(63,600
)

Total stockholders’ equity

79,197

143,257

Total liabilities and stockholders’ equity

$
1,289,739

$
1,320,536

~~The accompanying notes are an integral part of the consolidated financial statements~~

~~F-6~~

~~SUN COMMUNITIES, INC.~~

~~CONSOLIDATED STATEMENTS OF OPERATIONS~~

~~FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004~~

~~(amounts in thousands except for per share data)~~

2006

2005

2004

REVENUES

Income from real property

$
186,326

$
178,985

$
167,145

Revenue from home sales

20,244

18,385

17,667

Rental home revenue

15,174

9,084

4,558

Ancillary revenues, net

370

741

532

Interest

3,747

4,359

6,633

Gain on sale of land

—

—

5,879

Other income (loss)

1,033

(689
)

934

Total revenues

226,894

210,865

203,348

COSTS AND EXPENSES

Property operating and maintenance

46,916

45,091

41,544

Real estate taxes

15,860

15,173

13,753

Cost of home sales

15,700

13,861

14,242

Rental home operating and maintenance

11,485

7,372

3,368

General and administrative - real property

16,406

14,493

12,559

General and administrative - home sales and rentals

6,311

6,207

8,070

Depreciation and amortization

60,300

54,330

45,217

Extinguishment of debt

486

—

51,643

Deferred financing costs related to extinguished debt

234

—

5,557

Interest

61,173

55,650

43,899

Interest on mandatorily redeemable debt

3,945

4,322

4,294

Florida storm damage (recovery)

—

(390
)

600

Total expenses

238,816

216,109

244,746

Equity loss from affiliate

(16,583
)

(908
)

(151
)
Loss from operations

(28,505
)

(6,152
)

(41,549
)
Less income (loss) allocated to minority interest:

Preferred OP Units

—

961

4,438

Common OP Units

(3,248
)

(837
)

(5,382
)
Loss from continuing operations

(25,257
)

(6,276
)

(40,605
)
Income from discontinued operations

—

824

137

Loss before cumulative effect of change in accounting principle

(25,257
)

(5,452
)

(40,468
)
Cumulative effect of change in accounting principle

289

—

—

Net loss

$
(24,968
)
$
(5,452
)
$
(40,468
)

Weighted average common shares outstanding:

Basic

17,641

17,716

18,318

Diluted

17,641

17,716

18,318

Basic and diluted earnings (loss) per share:

Continuing operations

$
(1.44
)
$
(0.35
)
$
(2.22
)
Discontinued operations

—

0.04

0.01

Loss before cumulative effect of change in accounting principle

(1.44
)

(0.31
)

(2.21
)
Cumulative effect of change in accounting principle

0.02

—

—

Net loss

$
(1.42
)
$
(0.31
)
$
(2.21
)

~~The accompanying notes are an integral part of the consolidated financial statements~~

~~F-7~~

~~SUN COMMUNITIES, INC.~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS~~

~~FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004~~

~~(amounts in thousands)~~

2006

2005

2004

Net loss

$
(24,968
)
$
(5,452
)
$
(40,468
)
Unrealized income on interest rate swaps

288

1,491

335

Comprehensive loss

$
(24,680
)
$
(3,961
)
$
(40,133
)

~~SUN COMMUNITIES, INC.~~

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

~~FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004~~

~~(amounts in thousands except for per share data)~~

Common
Stock

Additional
Paid-in
Capital

Officer’s Notes

Unearned
Compensation

Accumulated
Comprehensive
Earnings
(Loss)

Distributions
in Excess of
Accumulated
Earnings

Treasury
Stock

Total Equity

Balance, January 1, 2004

$
192

$
446,211

$
(10,299
)
$
(7,337
)
$
(1,294
)
$
(94,479
)
$
(6,384
)
$
326,610

Issuance of common stock, net

4

13,455

(10,331
)

3,128

Amortization and forfeitures

2,111

2,111

Repayment of officer’s notes

501

501

Treasury stock purchased, 1,000 shares

(37,201
)

(37,201
)
Reclassification and conversion of
minority interest

2,856

2,856

Net loss

(40,468
)

(40,468
)
Unrealized income on interest rate swaps

335

335

Cash distributions declared of $2.44
per share

(46,126
)

(46,126
)
Balance, December 31, 2004

$
196

$
462,522

$
(9,798
)
$
(15,557
)
$
(959
)
$
(181,073
)
$
(43,585
)
$
211,746

Issuance of common stock, net

2

2,043

2,045

Amortization and forfeitures

2,370

2,370

Repayment of officer’s notes

371

371

Treasury stock purchased, 600 shares

(20,015
)

(20,015
)
Reclassification and conversion of
minority interest

(3,997
)

(3,997
)
Net loss

(5,452
)

(5,452
)
Unrealized income on interest rate swaps

1,491

1,491

Cash distributions declared of $2.50
per share

(45,302
)

(45,302
)
Balance, December 31, 2005

$
198

$
460,568

$
(9,427
)
$
(13,187
)
$
532

$
(231,827
)
$
(63,600
)
$
143,257

Issuance of common stock, net

1

2,052

2,054

Exercise of stock options

1

1,984

1,984

Reclassification of unearned compensation
on adoption of SFAS 123R

(13,187
)

13,187

—

Stock-based compensation - amortization
and forfeitures

2,600

2,600

Repayment of officer’s notes

344

344

Reclassification and conversion of
minority interest

(1,135
)

(1,135
)
Net loss

(24,968
)

(24,968
)
Unrealized income on interest rate swaps

288

288

Cash distributions declared of $2.52
per share

(45,227
)

(45,227
)
Balance, December 31, 2006

$
200

$
452,882

$
(9,083
)
$
—

$
820

$
(302,022
)
$
(63,600
)
$
79,197

~~The accompanying notes are an integral part of the consolidated financial statements~~

~~F-8~~

~~SUN COMMUNITIES, INC.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~FOR THE YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004~~

~~(amounts in thousands)~~

2006

2005

2004

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$
(24,968
)
$
(5,452
)
$
(40,468
)
Adjustments to reconcile net loss to cash provided by operating activities:

Loss allocated to minority interests

(3,248
)

(723
)

(5,364
)
Gain from property and land dispositions

—

(828
)

(5,879
)
Loss (gain) on valuation of derivative instruments

(279
)

430

528

Stock compensation expense, net of cumulative effect of change in accounting principle

2,942

1,843

1,968

Depreciation and amortization

63,447

57,430

47,542

Amortization of deferred financing costs

1,659

1,939

2,160

Extinguishment of debt

486

—

51,643

Write off of deferred financing costs related to extinguished debt

234

—

5,557

Distributions from affiliate

450

1,100

2,238

Equity loss from affiliate

16,583

908

151

Increase in notes receivable from sale of homes

(4,833
)

(3,286
)

(5,022
)
Decrease (increase) in inventory, other assets and other receivables, net

4,850

9,232

(7,119
)
Increase (decrease) in accounts payable and other liabilities

(1,222
)

331

7,103

Net cash provided by operating activities

56,101

62,924

55,038

CASH FLOWS FROM INVESTING ACTIVITIES:

Investment in rental properties

(52,113
)

(87,990
)

(147,965
)
Purchase of short-term investments

—

(84,875
)

(106,975
)
Proceeds from sale of short-term investments

—

129,850

62,000

Proceeds related to property and land dispositions

—

3,867

8,257

Proceeds from sale of installment loans on manufactured homes to Origen

4,226

—

13,289

Decrease in notes receivable and officer’s notes, net

102

5,384

22,025

Net cash used in investing activities

(47,785
)

(33,764
)

(149,369
)
CASH FLOWS FROM FINANCING ACTIVITIES:

Redemption of common stock and OP units

(1,429
)

(2,410
)

(1,422
)
Proceeds from option exercise

2,430

114

2,455

Borrowings on lines of credit

145,795

113,400

496,044

Repayments on lines of credit

(132,695
)

(40,100
)

(595,044
)
Payments to retire preferred operating partnership units

(8,175
)

(50,000
)

—

Payments to redeem notes payable and other debt

(68,675
)

(34,346
)

(426,224
)
Proceeds from notes payable and other debt

102,100

6,025

744,462

Payments for deferred financing costs

(1,289
)

(35
)

(9,091
)
Treasury stock purchases

—

(20,015
)

(37,201
)
Distributions

(49,075
)

(48,499
)

(51,120
)
Net cash used in (provided by) financing activities

(11,013
)

(75,866
)

122,859

Net decrease in cash and cash equivalents

(2,697
)

(46,706
)

28,528

Cash and cash equivalents, beginning of period

5,880

52,586

24,058

Cash and cash equivalents, end of period

$
3,183

$
5,880

$
52,586

SUPPLEMENTAL INFORMATION:

Cash paid for interest including capitalized amounts of $60, $69, and $380
in 2006, 2005 and 2004, respectively

$
59,604

$
54,129

$
46,119

Cash paid for interest on mandatorily redeemable debt

$
3,933

$
4,311

$
4,339

Noncash investing and financing activities:

Debt assumed for rental properties

$
4,500

$
—

$
34,186

Issuance of partnership units to retire capitalized lease obligations

$
—

$
—

$
4,725

Unrealized gain on interest rate swaps

$
288

$
1,491

$
335

~~The accompanying notes are an integral part of the consolidated financial statements~~

~~F-9~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:~~

~~Business:~~ Sun Communities, Inc. (the “Company”) is a real estate investment trust (“REIT”) which owns and operates 136 manufactured housing communities at December 31, 2006, located in eighteen states concentrated principally in the Midwest and Southeast comprising 47,606 developed sites and 6,813 sites suitable for development.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

~~Principles of Consolidation:~~ The accompanying financial statements include the accounts of the Company and all majority-owned and controlled subsidiaries including Sun Communities Operating Limited Partnership (the “Operating Partnership”) SunChamp LLC (“SunChamp”), and Sun Home Services, Inc. (“SHS”). SHS is a wholly owned subsidiary and is included in the consolidated financial statements in accordance with Financial Interpretation No. 46(R), “Consolidation of Variable Interest Entities”. With total assets of approximately $143.7 million, SHS actively markets, sells and leases new and pre-owned manufactured homes for placement in the Company’s properties.

The minority interests include 2.3 million Common Operating Partnership Units (“OP Units”) which are convertible into an equivalent number of shares of the Company’s common stock. Such conversion would have no effect on earnings per share since the allocation of earnings to an OP Unit is equivalent to earnings allocated to a share of common stock. The minority interests are adjusted to their relative ownership interest whenever OP Units or common stock are issued, converted or retired by reclassification to/from paid-in capital.

Preferred OP Units (“POP Units”) of $53.9 million and $62.1 million, which are mandatorily redeemable, are included in debt at December 31, 2006 and 2005, respectively, pursuant to the adoption of Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liability and Equity”. These POP Units pay priority returns at rates ranging from 6.0 percent to 7.6 percent and mature between 2007 and 2014. Of these POP Units, $40.3 million are convertible into shares of the Company’s common stock or OP Units at conversion prices ranging from $45 to $68 per unit. The maximum amount that the Company is required to pay to redeem its POP Units is $53.9 million and, if converted, approximately 626,000 shares of the Company’s capital stock or OP Units would be issued. Subsequent to year-end, 100,000 of the 626,000 POP Units were redeemed for $4.5 million cash.

Of the $53.9 million POP Units included in debt at December 31, 2006, $4.7 million were issued during 2004 in connection with property acquisitions. These POP Units pay a priority return at 7.625% and mature on May 15, 2010.

~~F-10~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:~~

~~Rental Property:~~ Rental property is recorded at cost, less accumulated depreciation. The Company measures the recoverability of its assets in accordance with Statement of Financial Accounting Standards No. 144 (“SFAS 144”), “Accounting for the Impairment or Disposal of Long Lived Assets.” If such assets were deemed to be impaired as a result of this measurement evaluation, the impairment that would be recognized is the amount by which the carrying amount of the asset exceeds fair value as determined on a discounted net cash flow basis. Assets are tested for impairment every three years or more frequently whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Circumstances that may prompt a test of recoverability may include a significant decrease in anticipated market price, an adverse change to the extent or manner in which an asset may be used or in its physical condition or other such events that may significantly change the value of the long-lived asset.

The Company periodically receives offers from interested parties to purchase certain of its properties. These offers may be the result of an active program initiated by the Company to sell the property, or from an unsolicited offer to purchase the property. The typical sale process involves a significant negotiation and due diligence period between the Company and the potential purchaser. As the intent of this process is to determine if there are items that would cause the purchaser to be unwilling to purchase or the Company unwilling to sell, it is not unusual for such potential offers of sale/purchase to be withdrawn as such issues arise. The Company classifies assets as “held for sale” when it is probable, in its opinion, that a sale transaction will be completed within one year. This typically occurs when all significant contingencies surrounding the closing have been resolved, which often corresponds with the closing date.

The Company allocates the purchase price of properties to net tangible and identified intangible assets acquired based on their fair values in accordance with the provisions of SFAS No. 141, “Business Combinations”. In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including analysis of recently acquired and existing comparable properties in our portfolio, other market data and independent appraisals if obtained in connection with the acquisition or financing of the respective property. The Company also considers information obtained about each property as a result of its pre-acquisition due diligence, marketing and leasing activities in estimating the fair value of the tangible and intangible assets (including in-place leases) acquired.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Useful lives are 30 years for land improvements and buildings, 10 years for rental homes, 7 to 15 years for furniture, fixtures and equipment, and 7 years for intangible assets.

~~Cash and Cash Equivalents:~~ The Company considers all highly liquid investments with a maturity at date of purchase of three months or less to be cash and cash equivalents. Certain cash accounts totaling $0.6 million and $1.5 million at December 31, 2006 and 2005, respectively, that hold resident security deposit and tax and mortgage escrow funds are considered restricted cash.

~~F-11~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:~~

~~Notes and Accounts Receivable:~~ Notes and accounts receivable are stated at their outstanding balance reduced by allowance for uncollectible accounts. The Company evaluates the recoverability of its receivables whenever events occur or there are changes in circumstances such that management believes it is probable

that it will be unable to collect all amounts due according to the contractual terms of the loan and lease agreements. The ability to collect the loans is measured based on the present value of the expected future cash flow discounted at the loan’s effective interest rate or the fair value of the collateral if the loan is collateral dependent. For receivables relating to community rents the Company reserves for receivables when it believes collection is less than probable.

~~Share-Based Compensation:~~ The Company adopted SFAS 123(R), “Share-Based Payment” effective January 1, 2006 using the “modified prospective” method permitted by SFAS 123(R) in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of Statement 123 for all awards granted to employees prior to the effective date of SFAS 123(R) that remain unvested on the effective date. Prior to the adoption of SFAS 123(R), the company accounted for its stock options using the intrinsic value method contained in APB Opinion No. 25, “Accounting for Stock Issued to Employees.”

~~Investments in and Advances to Affiliates:~~ Origen Financial, Inc. (“Origen”), is a publicly-traded real estate investment trust in the business of originating, acquiring and servicing manufactured home loans. In October 2003, the Company purchased 5,000,000 shares of common stock of Origen for $50.0 million. As of December 31, 2006, the Company’s 5,000,000 shares of Origen common stock represented approximately 20% of the issued and outstanding shares of the capital stock of Origen. The investment is accounted for using the equity method of accounting. At December 31, 2006, the Company’s investment in Origen had a market value of $34.2 million. The Company received dividends from Origen of $0.5 and $1.1 million during 2006 and 2005, respectively.

The Company has considered the provisions of Accounting Principles Bulletin No. 18, “The Equity Method of Accounting for Investments in Common Stock”, and has concluded that due to the extended period in which carrying value exceeded market value, a recognition of an other than temporary impairment was required as of December 31, 2006. The Company considered numerous factors, including:

~~The length of the time and the extent to which the market value has been less than cost,~~

~~The financial condition and near-term prospects of Origen,~~

~~The intent and ability of the Company to retain its investment in Origen for a period of time sufficient to allow for any anticipated recovery in market value,~~

~~The condition and trend of the economic cycle,~~

~~Origen’s financial performance and projections,~~

~~F-12~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

1.~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:~~

~~Investments in and Advances to Affiliates, (continued):~~

~~Trends in the general market,~~

~~Origen’s capital strength, and~~

~~Origen’s dividend payment record.~~

The Company also considered various indicators of fair value, including multiples of book value, multiples of EBITDA, book value, tangible book value, and market price. As a result of its analysis, the Company recognized an $18.0 million impairment of the carrying value of its equity investment in Origen which is included in equity loss from affiliate.

~~Summarized consolidated financial information of Origen at December 31, 2006, 2005 and 2004 is presented below before elimination of inter-company transactions.~~

(Unaudited)
2006

2005

2004

Loans receivable

$
950,226

$
768,410

$
563,268

Other assets

122,841

124,593

119,279

Total assets

$
1,073,067

$
893,003

$
682,547

Warehouse and securitization financing

$
816,533

$
643,914

$
435,761

Repurchase agreements

23,582

23,582

20,153

Other liabilities

28,488

25,556

23,167

Total liabilities

868,603

693,052

479,081

Equity

204,464

199,951

203,466

Total liabilities and equity

$
1,073,067

$
893,003

$
682,547

Revenues

$
92,082

$
74,042

$
53,663

Expenses

85,111

76,701

56,629

Net income (loss)

$
6,971

$
(2,659
)
$
(2,966
)
Sun’s equity income (loss)

$
(16,583
)
$
(908
)
$
(151
)

~~h. Revenue Recognition:~~ Rental income attributable to site and home leases is recorded on a straight-line basis when earned from tenants. Leases entered into by tenants generally range from month-to-month to one year and are renewable by mutual agreement of the Company and resident or, in some cases, as provided by state statute. Revenue from the sale of manufactured homes is recognized upon transfer of title at the closing of the sales transaction. Interest income on notes receivable is recorded on a level yield basis over the life of the notes.

~~F-13~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:~~

~~i. Other Capitalized Costs:~~ The Company capitalizes certain costs (including interest and other costs) incurred in connection with the development, redevelopment, capital enhancement and leasing of its properties. Management is required to use professional judgment in determining whether such costs meet the criteria for immediate expense or capitalization. The amounts are dependent on the volume and timing of such activities and the costs associated with such activities. Maintenance, repairs and minor improvements to properties are expensed when incurred. Renovations and improvements to properties are capitalized and depreciated over their estimated useful lives and construction costs related to the development of new community or expansion sites are capitalized until the property is substantially complete. Certain expenditures to dealers and residents related to obtaining lessees in our communities are capitalized, as intangible assets, and are amortized over a seven year period based on the anticipated term of occupancy of a resident. Costs associated with implementing the Company’s new computer systems are capitalized and amortized over the estimated useful lives of the related software and hardware.

~~j. Fair Value of Financial Instruments:~~ The carrying values of cash and cash equivalents, escrows, receivables, accounts payable, accrued expenses and other assets and liabilities are reasonable estimates of their fair values because of the shorter maturities of these instruments. The fair value of the Company’s long-term indebtedness, which is based on the estimates of management and on rates currently quoted and rates currently prevailing for comparable loans and instruments of comparable maturities, is less than the carrying value by approximately $24.7 million and $30.8 million at December 31, 2006 and 2005, respectively. Potential expenses that would be incurred in an actual sale or settlement are not taken into consideration.

~~Derivative Instruments and Hedging Activities:~~ The Company has entered into four derivative contracts consisting of three interest rate swap agreements and an interest rate cap agreement. The Company’s primary strategy in entering into derivative contracts is to minimize the variability that changes in interest rates could have on its future cash flows. The Company generally employs derivative instruments that effectively convert a portion of its variable rate debt to fixed rate debt and to cap the maximum interest rate on its variable rate borrowings. The Company does not enter into derivative instruments for speculative purposes.

The swap agreements were effective April 2003, and have the effect of fixing interest rates relative to a collateralized term loan due to Fannie Mae. One swap matures in July 2009, with an effective fixed rate of 4.84 percent. A second swap matures in July 2012, with an effective fixed rate of 5.28 percent. The third swap matures in July 2007, with an effective fixed rate of 3.88 percent. The third swap is effective as long as 90-day LIBOR is 7 percent or lower. The three swaps have an aggregate notional amount of $75.0 million. The interest rate cap agreement has a cap rate of 11.79 percent, a notional amount of $152.4 million and a termination date of May 29, 2007. Each of the Company’s derivative contracts is based upon 90-day LIBOR.

~~F-14~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued:~~

~~Derivative Instruments and Hedging Activities, (continued):~~

The Company has designated the first two swaps and the interest rate cap as cash flow hedges for accounting purposes. The changes in the value of these hedges are reflected in accumulated other comprehensive income (loss) on the balance sheet. These three hedges were highly effective and had minimal effect on income. The third swap does not qualify as a hedge for accounting purposes and, accordingly, the entire change in valuation, whether positive or negative, is reflected as a component of interest expense. The valuation adjustment decreased interest expense by $0.3 million for the year ended December 31, 2006, and increased interest expense by $0.4 million and $0.5 million for the years ended December 31, 2005 and 2004, respectively.

In accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” which requires all derivative instruments to be carried at fair value on the balance sheet, the Company has recorded an asset of $0.6 million and less than $0.1 million as of December 31, 2006 and 2005, respectively.

These valuation adjustments will only be realized if the Company terminates the swaps prior to maturity. This is not the intent of the Company and, therefore, the net of valuation adjustments through the various maturity dates will approximate zero.

~~Deferred Tax Assets:~~ The Company has certain subsidiaries that are taxed as regular corporations. Deferred tax assets or liabilities are recognized for temporary differences between the tax bases of non-REIT assets and liabilities and their carrying amounts in the financial statements and net operating loss carry forwards. Deferred tax assets and liabilities are measured using currently enacted tax rates. A valuation allowance is established if, based on the available evidence, it is considered more likely than not that some portion or all of the deferred tax assets will not be realized.

~~m. Inventory:~~ ~~Inventory of manufactured homes is stated at lower of specific cost or market.~~

~~Reclassifications:~~ ~~Certain 2004 amounts have been reclassified to conform to the 2005 financial statement presentation. Such reclassifications had no effect on results of operations as originally presented.~~

~~o. Use of Estimates:~~ The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts in the financial statements and accompanying notes including the depreciable lives and recoverability of real estate assets and the assumption of interest rates for present value calculations. These estimates involve judgments with respect to, among other things, future economic factors that are difficult to predict and are often beyond management’s control. As a result, actual amounts may differ from these estimates.

~~F-15~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~RENTAL PROPERTY (amounts in thousands):~~

At December 31,

2006

2005

Land

$
117,563

$
116,738

Land improvements and buildings

1,175,045

1,156,612

Rental homes and improvements

151,843

117,314

Furniture, fixtures, and equipment

37,229

36,120

Land held for future development

31,082

31,082

Property under development

—

256

1,512,762

1,458,122

Less accumulated depreciation

(351,113
)

(296,302
)
Investment property, net

$
1,161,649

$
1,161,820

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

During 2005, the Company acquired one property located near Tampa, Florida for approximately $7.3 million comprised of 697 recreational vehicle sites and 31 manufactured home sites. The property was acquired for cash.

~~During the first quarter of 2005, the Company prospectively adopted a change in the estimated service lives of homes in its rental program from either 40, 35 or 20 years to 10 years.~~

~~F-16~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

3.	~~DISPOSITION OF PROPERTIES:~~

In 2004, the Company sold undeveloped commercial land for $8.8 million resulting in a gain of approximately $5.9 million. In 2005, the Company sold two properties for a combined sales price of $5.7 million.

In accordance with FAS 144, results of operations and gain/(loss) on sales of real estate for properties with identifiable cash flows are reflected in the Consolidated Statements of Operations as income from discontinued operations for all periods presented. Below is a summary of the results of operations of sold properties through their respective disposition dates (in thousands):

Summary Statement of Operations
Disposed Properties

2006

2005

2004

Income from rental property

$
—

$
407

$
690

Revenue from home sales

—

96

170

Rental home revenue

—

7

0

Ancillary revenues, net

—

(2
)

13

Property operating and maintenance

—

(170
)

(275
)
Real estate taxes

—

(24
)

(64
)
Cost of home sales

—

(89
)

(141
)
Rental home operating and maintenance

—

(2
)

0

Depreciation and amortization

—

(62
)

(178
)
Interest and general and administrative

—

(51
)

(60
)
Income from operations

—

110

155

Income allocated to common OP units

—

(114
)

(18
)
Gain on sale of discontinued operations

—

828

—

Income from discontinued operations

$
—

$
824

$
137

~~F-17~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~4. NOTES AND OTHER RECEIVABLES:~~

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

At December 31,

2006

2005

Mortgage note receivable, with interest payable at a weighted
average interest rate of 7.92% and 6.63% at December 31,
2006 and 2005, respectively, maturing in August 2008,
collateralized by a manufactured home community

$
13,532

$
13,532

Installment loans on manufactured homes with interest payable
monthly at a weighted average interest rate and maturity of
6.7% and 15 years, net of allowance for losses of $0.2
million at December 31, 2006 and 2005.

20,537

19,688

Other receivables, net of allowance for losses of $0.3 million
at December 31, 2006 and 2005.

7,338

7,914

$
41,407

$
41,134

The mortgage note receivable of $13.5 million at December 31, 2006 was repaid on March 1, 2007. Installment loans on manufactured homes include $20.5 million and $15.0 million at December 31, 2006 and 2005, respectively, of financing provided by the Company to purchasers of manufactured homes located in its communities.

In the third quarter of 2006, the Company sold a portfolio of installment loans on manufactured homes totaling approximately $4.1 million in a related party transaction to a wholly-owned subsidiary of Origen Financial, Inc. for 100.5 percent of the principal balance for loans that were 89 days or less delinquent and 100 percent of the principal balance for loans that were 90 days or more delinquent. The Company recognized a gain on the sale of these notes of $0.02 million.

Officer’s notes, presented as a reduction to stockholders’ equity in the balance sheet, are 10 year, LIBOR + 1.75% notes, with a minimum and maximum interest rate of 6% and 9%, respectively. The notes become due in three equal installments on each of December 31, 2008, 2009 and 2010. The following table sets forth certain information regarding officer’s notes as of December 31, 2006 (in thousands except for shares and units):

~~F-18~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

4.~~NOTES AND OTHER RECEIVABLES, continued:~~

At December 31,

2006

2005

Secured by

Secured by

Promissory Notes

Outstanding
Principal
Balance

Common
Stock

Common
OP Units

Outstanding
Principal
Balance

Common
Stock

Common
OP Units

Secured - $1.3 million

$
1,050

64,586

—

$
1,089

67,034

Secured - $6.6 million

5,332

143,409

103,170

5,535

148,846

107,082

Secured - $1.0 million

826

76,348

—

857

79,243

Unsecured - $1.0 million

826

—

—

857

Unsecured - $1.3 million

1,049

—

—

1,089

$
9,083

284,343

103,170

$
9,427

295,124

107,082

The officer’s personal liability on the secured promissory notes is limited to all accrued interest on such notes plus fifty percent (50%) of the deficiency, if any, after application of the proceeds from the sale of the secured shares and/or the secured units to the then outstanding principal balance of the promissory notes. The unsecured notes are fully recourse to the officer.

The reduction in the aggregate principal balance of these notes was $0.3 million and $0.04 million for the years 2006 and 2005, respectively. During an internal review in 2006, it was determined that the officer was subject to an increased interest rate due to technical default. The cumulative additional interest has been paid. Total interest was $1.0 million for the year ended December 31, 2006, and $0.6 million for the years ended December 31, 2005 and 2004.

5.	~~DEBT AND LINE OF CREDIT:~~

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

At December 31,

2006

2005

Collateralized term loans, 7.01%

$
—

$
40,079

Collateralized term loans - CMBS, 4.93-5.32%, due July 1, 2011-2016

492,749

494,511

Collateralized term loans - FNMA, of which $77.4M is variable, due
May 1, 2014 and January 1, 2015 at the Company’s option, interest at
4.51 - 5.3% at December 31, 2006 and 4.51 - 5.2% at
December 31, 2005.

385,299

387,624

Preferred OP units, redeemable at various dates through
January 2, 2014, average interest at 6.9% at December 31, 2006 and
December 31, 2005.

53,947

62,123

Mortgage notes, other, maturing at various dates
through May 1, 2017, average interest at 6.23% and 6.5% at
December 31, 2006 and December 31, 2005 respectively.

148,455

65,831

$
1,080,450

$
1,050,168

~~F-19~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~DEBT AND LINE OF CREDIT, continued:~~

The collateralized term loans totaling $878.0 million at December 31, 2006, are secured by 87 properties comprising approximately 30,809 sites representing approximately $597.6 million of net book value. The mortgage notes totaling $148.5 million at December 31, 2006, are collateralized by 15 communities comprising approximately 5,144 sites representing approximately $160.9 million of net book value.

The Company has an unsecured revolving line of credit facility with a maximum borrowing capacity of $115 million, subject to certain borrowing base calculations. The outstanding balance on the line of credit at December 31, 2006 and 2005, was $86.4 million and $73.3 million, respectively. In addition, $3.4 million of availability was used to back standby letters of credit at December 31, 2006 and 2005. Borrowings under the line of credit bear an interest rate of LIBOR plus 1.75% (7.1% at December 31, 2006) and mature September 30, 2007, with a one year extension at the Company’s option. At December 31, 2006 and 2005, $25.2 million and $36.5 million, respectively, were available to be drawn under the facility based on the calculation of the borrowing base at each year end.

In March of 2006, the Company closed on a $40.0 million floor plan facility that allows for draws on new and pre-owned home purchases and on the Company’s portfolio of rental homes. At December 31, 2006, there was no outstanding balance on the floor plan.

~~In May of 2006, the Company redeemed $8.2 million of Preferred OP units.~~

During the third quarter of 2006, the Company completed financings totaling $48 million. The 10 year notes have interest only payments at a rate of 6.159 percent and are secured by three communities. The proceeds from the financings were used to repay approximately $12 million of mortgage notes and pay down $36 million of the company’s lines of credit.

During the fourth quarter of 2006, the Company defeased collateralized term loans totaling $39.3 million, which were cross collateralized by seven properties. One of the properties was refinanced for $54.0 million (included in the balance of Mortgage notes, other). The 10 year note has interest only payments at a rate of 5.79 percent. The defeasance transaction met the criteria of SFAS 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”, and resulted in debt extinguishment expense of $0.5 million and expense of deferred financing costs of $0.2 million. Proceeds from the financing were used to purchase treasuries for the defeasance transaction and to pay down approximately $14.0 million on the Company’s unsecured line of credit.

Also during the fourth quarter of 2006, the Company entered into two rate lock agreements for financing that is secured by two communities. The blended rate is 5.825 percent and 5.842 percent on principal of $20.0 million and $17.5 million, respectively. The Company paid a rate lock deposit of $375,000.

At December 31, 2006, the total of maturities and amortization of debt during the next five years are approximately as follows: 2007 – $32.9 million; 2008 - $18.3 million; 2009 - $28.3 million, 2010 - $17.0 million; 2011 - $121.0 million and $863.0 million thereafter.

The most restrictive of these debt agreements place limitations on secured and unsecured borrowings and contain minimum debt service coverage, leverage, distribution and net worth requirements. At December 31, 2006 and 2005, all covenants were met.

~~F-20~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~6. SHARE-BASED COMPENSATION:~~

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement No. 123 (revised December 2004), Share-Based Payment (“SFAS 123(R)”). SFAS 123(R) replaces FASB Statement No. 123 (“Statement 123”), Accounting for Stock-Based Compensation, and supersedes APB Opinion No. 25 (“APB 25”), Accounting for Stock Issued to Employees. SFAS 123(R) requires compensation costs related to share-based payment transactions be recognized in the financial statements. With limited exceptions, the amount of compensation cost will be measured based on the grant-date fair value of the equity or the liability instruments issued. In addition, liability awards will be remeasured each reporting period.

The Company adopted SFAS 123(R) effective January 1, 2006, using the “modified prospective” method permitted by SFAS 123(R) in which compensation cost is recognized beginning with the effective date (a) based on the requirements of SFAS 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of Statement 123 for all awards granted to employees prior to the effective date of SFAS 123(R) that remain unvested on the effective date. Prior to the adoption of SFAS 123(R), forfeitures were recognized as they occurred. Upon adopting SFAS 123(R), an estimate of future forfeitures is incorporated into the determination of compensation cost for restricted stock grants and stock options. The effect of this estimate of future forfeitures is the reversal of previously recorded compensation expense on restricted stock grants that were not vested at January 1, 2006, and are now expected to be forfeited. For the year ended December 31, 2006, the cumulative effect of adopting SFAS 123(R) was an increase in loss from operations of $0.06 million, an increase in loss from continuing operations of $0.05 million, a decrease in net loss of $0.2 million and an increase of $0.01 in both basic and diluted earnings per share.

Under the provisions of SFAS 123(R), the recognition of aggregate deferred compensation as a component of equity is no longer permitted. Therefore, the amount of deferred compensation that had been in “Unearned compensation” was reclassified to “Additional paid-in capital” in the Company’s Consolidated Balance Sheet commencing January 1, 2006.

The modified prospective method of SFAS 123(R) does not require prior periods to be restated to reflect the amount of compensation cost that would have been reflected in the financial statements. The effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Statement 123 to stock-based compensation for the periods ended December 31, 2005 and 2004, is as follows (amounts in thousands except for per share data):

~~F-21~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~SHARE-BASED COMPENSATION, continued:~~

2005

2004

Net loss, as reported

$
(5,452
)
$
(40,468
)
Stock-based compensation expense included in net loss as reported

$
1,843

$
1,968

Stock-based compensation expense under fair value method

(1,900
)

(2,030
)
Pro forma net loss

$
(5,509
)
$
(40,530
)

Loss per share (Basic and Diluted), as reported

$
(0.31
)
$
(2.21
)
Loss per share (Basic and Diluted), pro forma

$
(0.31
)
$
(2.21
)

Total compensation cost recorded for share-based compensation for the years ended December 31, 2006, 2005 and 2004, was $3.2 million (excluding the cumulative effect of change in accounting principle adjustment), $1.8 million and $2.0 million, respectively. Included in the compensation cost for the year ended December 31, 2006, was $0.04 million related to stock options that were granted prior to the adoption of SFAS 123(R), which are being recognized over the remaining vesting period.

The Company awards restricted stock and options to its employees under its Second Amended and Restated Stock Option Plan (the “Plan”). The Plan provides for the issuance of options, stock appreciation rights, restricted stock and other stock based awards. No further awards may be granted under the Plan at this time. The Company believes that the awards better align the interests of its employees with those of its shareholders and has provided these incentives to attract and retain executive officers and key employees.

~~Restricted Stock~~

~~The Company’s primary share-based compensation is restricted stock. The following table summarizes the Company’s restricted stock activity for the year ended December 31, 2006:~~

Number of Shares

Weighted
Average Grant
Date Fair Value

Nonvested restricted shares at January 1, 2006

417,275

$
34.91

Granted

—

Vested

(65,680
)
$
34.44

Forfeited

(5,500
)
$
34.25

Nonvested restricted shares at December 31, 2006

346,095

$
35.01

~~F-22~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

6.	~~SHARE-BASED COMPENSATION, continued:~~

The remaining compensation expense to be recognized associated with the 346,095 restricted shares outstanding at December 31, 2006 is approximately $6.9 million. That expense is expected to be recognized $1.7 million in 2007, $1.3 million in 2008, $2.3 million in 2009 and $1.6 million thereafter. For the year ended December 31, 2006, the Company recognized $2.1 million of compensation expense related to its outstanding restricted stock. Recipients receive dividend payments on the vested and unvested shares of restricted stock. The total fair value of shares vested during the years ended December 31, 2006, 2005 and 2004, was $2.3 million, $1.7 million and $0.7 million, respectively.

~~Performance-Based Restricted Stock~~

The Company has 93,750 performance-based restricted shares with aggregate fair value of $3.3 million which may vest on March 1, 2010. The number of shares that will vest will be determined based on the compounded annual growth rate of the Company’s per share funds from operations (“FFO”) as determined by comparing the per share FFO for the year ended December 31, 2009, with the per share FFO for the year ended December 31, 2005. The Company must achieve compounded annual growth of at least 5% in order for the recipients to receive any amount of the award and at least 9% to receive the entire share award. The Company recognizes expense related to performance-based restricted shares based on an estimate of the number of restricted shares that will ultimately vest. For the year ended December 31, 2006, compensation expense of $0.6 million was recognized for the performance-based restricted shares based on an estimated vesting of 46.67% of the shares on March 1, 2010. The estimated vesting is based on projected compounded annual FFO growth of 5% through December 31, 2009.

~~Options~~

At December 31, 2006, the Company had 223,547 options outstanding and exercisable under the Plan. For the twelve months ended December 31, 2006, the Company recognized $0.03 million of compensation expense related to its outstanding options. No awards were granted in 2006 or 2005. The fair value of the options issued is estimated on the date of grant using the Binomial (lattice) option pricing model, with the following assumptions used for the grants for the period indicated:

2006
2005
May
2004
award

Estimated fair value per share of options granted during year:

N/A
N/A
$
2.49

Assumptions:

Annualized dividend yield

N/A
N/A

6.80
%
Common stock price volatility

N/A
N/A

16.50
%
Risk-free rate of return

N/A
N/A

3.18
%
Expected option term (in years)

N/A
N/A

3

~~F-23~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

6.	~~SHARE-BASED COMPENSATION, continued:~~

~~The Company issues new shares at the time of share option exercise (or share unit conversion). The following table summarizes the Company’s option activity for the twelve months of 2006:~~

Number of
options

Weighted
Average
Exercise Price
(per common share)

Weighted
Average
Contractual
Term
(in years)

Aggregate
Intrinsic
Value
(in 000’s)

Options outstanding at January 1, 2006

614,839

$
29.73

Granted

—

Exercised

(384,108
)
$
28.57

Forfeited

(7,184
)
$
32.91

Options outstanding at December 31, 2006

223,547

$
31.62

3.5

$
719

Options vested and exercisable at December 31, 2006

223,547

$
31.62

3.5

$
719

~~The aggregate intrinsic value of options exercised during years ended December 31, 2006 and 2005, was $0.8 million and $0.02 million, respectively.~~

~~Phantom Awards~~

At December 31, 2006, the Company had 22,500 unvested phantom liability awards with an aggregate fair value of $0.7 million. The phantom awards pay cash bonuses per share equal to the amount of dividend paid per share of common stock. The awards vest (cash bonus is paid) in varying amounts until 2014. The remaining unrecognized expense related to these phantom liability awards is $0.5 million. For the year ended December 31, 2006, the Company recognized $0.1 million of compensation expense related to these phantom awards. Awards of 13,000 shares were granted and no shares were vested, exercised or forfeited during the twelve months of 2006. The awards are remeasured at each reporting date.

At December 31, 2006, the Company had 18,750 unvested phantom performance-based liability awards with an aggregate fair value of $0.6 million. The phantom performance-based awards pay cash bonuses per vested share equal to the average of the highest and lowest selling price on March 1, 2010. The number of shares that will vest will be determined based on the compounded annual growth rate of the Company’s per share funds from operations (“FFO”) as determined by comparing the per share FFO for the year ended December 31, 2009, with the per share FFO for the year ended December 31, 2005. The Company must achieve compounded annual growth of at least 5% in order for the recipients to receive any amount of the award and at least 9% to receive the entire share award. The Company recognizes expense related to phantom performance-based liability awards based on an estimate of the number of phantom performance-based shares that will ultimately vest. For the twelve months ended December 31, 2006, compensation expense of $0.1 million was recognized for the phantom performance-based liability awards based on an estimated vesting of 46.67% of the award on March 1, 2010. The estimated vesting is based on projected compounded annual FFO growth of 5% through December 31, 2009.

~~F-24~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

6.	~~SHARE-BASED COMPENSATION, continued:~~

~~Director Option Awards~~

The Company also has a 2004 Non-Employee Director Option Plan (“Director Plan”) which authorizes the issuance of up to 100,000 options to non-employee directors. At December 31, 2006, the Company had 79,500 options awarded under the Director Plan and a predecessor plan. Of these, 15,000 are unvested of which 7,500, 5,000, and 2,500 shares will vest in the second quarter of 2007, 2008 and 2009, respectively. The remaining unrecognized expense related to these options is $0.03 million which will be recognized over the weighted average remaining vesting period of 1.1 years. For the year ended December 31, 2006, the Company recognized $0.03 million of compensation expense related to these director options. The fair value of the options issued is estimated on the date of grant using the Binomial (lattice) option pricing model, with the following assumptions used for the grants for the period indicated:

March
2006
award

May
2006
award

2005
May
2004
award

Estimated fair value per share of options granted during year:

$
3.59

$
2.31

N/A
$
3.64

Assumptions:

Annualized dividend yield

7.19
%

8.20
%
N/A

6.80
%
Common stock price volatility

17.04
%

17.05
%
N/A

16.97
%
Risk-free rate of return

4.68
%

5.05
%
N/A

4.33
%
Expected option term (in years)

7.5

7.5

N/A

7

~~The following table summarizes the Director option activity for the year ended December 31, 2006:~~

Number of
options

Weighted
Average
Exercise Price
(per common share)

Weighted
Average
Contractual
Term
(in years)

Aggregate
Intrinsic
Value
(in 000’s)

Options outstanding at January 1, 2006

71,500

$
33.63

Granted

15,000

$
33.84

Exercised

(7,000
)
$
27.41

Canceled

—

Options outstanding at December 31, 2006

79,500

$
34.22

4.1

$
237

Options vested and expected to vest

79,500

$
34.22

4.1

$
237

Options exercisable at December 31, 2006

64,500

$
34.29

3.0

$
193

~~F-25~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

7.~~STOCKHOLDERS’ EQUITY:~~

In April 1998, the Company declared a dividend of one Preferred Stock Purchase Right (“Right”) for each outstanding share of common stock. The Rights are not presently exercisable. Each Right entitles the holder, upon the occurrence of certain specified events, including a material change in the ownership of the Company, to purchase preferred stock and common stock, from the Company and/or from another person into which the Company is merged or which acquires control of the Company.

~~The Rights may be generally redeemed by the Company at a price of $0.01 per Right or approximately $0.2 million in total. The Rights expire on June 8, 2008.~~

In November 2004, the Company was authorized to repurchase up to 1,000,000 shares of its common stock by its Board of Directors. Repurchases of 600,000 shares were made pursuant to this program from the date of authorization through December 31, 2006.

8.	~~OTHER INCOME (LOSS) (amounts in thousands):~~

~~The components of other income are as follows for the years ended December 31, 2006, 2005 and 2004:~~

2006

2005

2004

Brokerage commissions

$
1,083

$
987

$
1,038

Disposal of assets

(745
)

(984
)

(39
)
Unsuccessful acquisition expenditures

(21
)

(524
)

(80
)
Lawsuit settlement

399

—

—

Other income (loss)

317

(168
)

15

$
1,033

$
(689
)
$
934

~~F-26~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~SEGMENT REPORTING (amounts in thousands):~~

The consolidated operations of the Company can be segmented into home sales and home rentals, and real property operations segments. Following is a presentation of financial information for the years ended December 31, 2006, 2005 and 2004.

Year ended December 31, 2006

Real
Property
Operations

Home Sales
and Home
Rentals

Consolidated

Revenues

$
186,326

$
35,418

$
221,744

Operating expenses/Cost of sales

62,776

27,185

89,961

Net operating income ⁽¹⁾/Gross profit

123,550

8,233

131,783

Adjustments to arrive at net loss:

Other revenues

4,497

653

5,150

General and administrative

(16,406
)

(6,311
)

(22,717
)
Depreciation and amortization

(45,571
)

(14,729
)

(60,300
)
Debt extinguishment costs

(486
)

—

(486
)
Deferred financing costs related to extinguished debt

(234
)

—

(234
)
Interest expense

(64,762
)

(356
)

(65,118
)
Equity loss from affiliate

(16,583
)

—

(16,583
)
Loss allocated to minority interest

3,248

—

3,248

Net loss from continuing operations

$
(12,747
)
$
(12,510
)
$
(25,257
)
Cumulative effect of change in accounting principle

289

—

289

Net loss

$
(12,458
)
$
(12,510
)
$
(24,968
)

Year ended December 31, 2005

Real
Property
Operations

Home Sales
and Home
Rentals

Consolidated

Revenues

$
178,985

$
27,469

$
206,454

Operating expenses/Cost of sales

60,264

21,233

81,497

Net operating income ⁽¹⁾/Gross profit

118,721

6,236

124,957

Adjustments to arrive at net income (loss):

Other revenues

2,977

1,434

4,411

General and administrative

(14,493
)

(6,207
)

(20,700
)
Depreciation and amortization

(44,736
)

(9,594
)

(54,330
)
Interest expense

(59,728
)

(244
)

(59,972
)
Florida storm damage

390

—

390

Equity loss from affiliate

(908
)

—

(908
)
Income allocated to minority interest

(124
)

—

(124
)
Net income (loss) from continuing operations

$
2,099

$
(8,375
)
$
(6,276
)
Income from discontinued operations

818

6

824

Net income (loss)

$
2,917

$
(8,369
)
$
(5,452
)

~~F-27~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~9. SEGMENT REPORTING (amounts in thousands), continued:~~

Year ended December 31, 2004

Real
Property
Operations

Home Sales
and Home
Rentals

Consolidated

Revenues

$
167,145

$
22,225

$
189,370

Operating expenses/Cost of sales

55,297

17,610

72,907

Net operating income ⁽¹⁾/Gross profit

111,848

4,615

116,463

Adjustments to arrive at net income (loss):

Other revenues

7,084

6,894

13,978

General and administrative

(12,559
)

(8,070
)

(20,629
)
Depreciation and amortization

(43,746
)

(1,471
)

(45,217
)
Debt extinguishment costs

(51,643
)

—

(51,643
)
Deferred financing costs related to extinguished debt

(5,557
)

—

(5,557
)
Interest expense

(48,025
)

(168
)

(48,193
)
Florida storm damage

(600
)

—

(600
)
Equity loss from affiliate

(151
)

—

(151
)
Loss allocated to minority interest

944

—

944

Net income (loss) from continuing operations

$
(42,405
)
$
1,800

$
(40,605
)
Income from discontinued operations

105

32

137

Net income (loss)

$
(42,300
)
$
1,832

$
(40,468
)

⁽¹⁾Investors in and analysts following the real estate industry utilize net operating income (“NOI”) as a supplemental performance measure. NOI is derived from revenues (determined in accordance with GAAP) minus property operating expenses and real estate taxes (determined in accordance with GAAP). NOI does not represent cash generated from operating activities in accordance with GAAP and should not be considered to be an alternative to net income (determined in accordance with GAAP) as an indication of the Company’s financial performance or to be an alternative to cash flow from operating activities (determined in accordance with GAAP) as a measure of the Company’s liquidity; nor is it indicative of funds available for the Company’s cash needs, including its ability to make cash distributions. The Company believes that net income is the most directly comparable GAAP measurement to net operating income. Net income includes interest and depreciation and amortization which often have no effect on the market value of a property and therefore limit its use as a performance measure. In addition, such expenses are often incurred at a parent company level and therefore are not necessarily linked to the performance of a real estate asset. The Company believes that net operating income is helpful to investors as a measure of operating performance because it is an indicator of the return on property investment, and provides a method of comparing property performance over time. The Company uses NOI as a key management tool when evaluating performance and growth of particular properties and/or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization and non-property specific expenses such as general and administrative expenses, all of which are significant costs, and therefore, NOI is a measure of the operating performance of the properties of the Company rather than of the Company overall.

Selected balance sheet data

December 31, 2006

December 31, 2005

Real
Property
Operations

Home Sales
and Home
Rentals

Consolidated

Real
Property
Operations

Home Sales
and Home
Rentals

Consolidated

Identifiable assets:

Investment property, net

$
1,031,771

$
129,878

$
1,161,649

$
1,052,603

$
109,217

$
1,161,820

Cash and cash equivalents

3,457

(274
)

3,183

6,125

(245
)

5,880

Inventory of manufactured homes

—

12,082

12,082

—

17,105

17,105

Investment in affiliate

29,319

—

29,319

46,352

—

46,352

Notes and other receivables

40,583

824

41,407

34,460

6,674

41,134

Other assets

40,921

1,178

42,099

47,129

1,116

48,245

Total assets

$
1,146,051

$
143,688

$
1,289,739

$
1,186,669

$
133,867

$
1,320,536

~~F-28~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~10. INCOME TAXES (amounts in thousands):~~

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

Qualification as a REIT involves the satisfaction of numerous requirements (some on an annual and quarterly basis) established under highly technical and complex Code provisions for which there are only limited judicial or administrative interpretations, and involves the determination of various factual matters and circumstances not entirely within the Company’s control. In addition, frequent changes occur in the area of REIT taxation which require the Company to continually monitor its tax status.

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

For income tax purposes, distributions paid to common stockholders consist of ordinary income, capital gains, and return of capital. For the years ended December 31, 2006, 2005 and 2004, distributions paid per share were taxable as follows (unaudited):

2006

2005

2004

Amount

Percentage

Amount

Percentage

Amount

Percentage

Ordinary income

$
0.14

5.6
%
$
—

0.0
%
$
—

0.0
%
Capital gain

—

0.0
%

0.06

2.5
%

—

0.0
%
Return of capital

2.38

94.4
%

2.44

97.5
%

2.44

100.0
%

$
2.52

100.0
%
$
2.50

100.0
%
$
2.44

100.0
%

SHS is subject to U.S. Federal income taxes. Deferred taxes reflect the estimated future tax effect of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. SHS has net operating loss carry forwards of approximately $22.6 million at December 31, 2006. A deferred tax asset of approximately $1.0 million is included in other assets in the consolidated balance sheets as of December 31, 2006 and 2005. The deferred tax asset is net of a valuation allowance of approximately $6.7 million and $5.3 million as of December 31, 2006 and 2005, respectively. SHS’s losses will begin to expire in 2021 through 2023 if not offset by future taxable income. Management believes its deferred tax asset will be realized but realization is continuously subject to an assessment as to recoverability in the future. Tax expense was $0.1 million and $1.0 million for the years ending December 31, 2005 and 2004, respectively, and is included in General and administrative-home sales and rentals in the consolidated statements of operations. No expense was recognized in 2006.

~~F-29~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~11.~~

~~EARNINGS (LOSS) PER SHARE (amounts in thousands):~~

2006

2005

2004

Earnings (loss) used for basic and diluted
earnings (loss) per share computation:

Continuing operations

$
(25,257
)
$
(6,276
)
$
(40,605
)
Discontinued operations

$
—

$
824

$
137

Total shares used for basic earnings (loss)
per share

17,641

17,716

18,318

Dilutive securities:

Stock options and other

—

—

—

Total weighted average shares used for diluted
earnings (loss) per share computation

17,641

17,716

18,318

Diluted earnings per share reflect the potential dilution that would occur if dilutive securities were exercised or converted into common stock. The calculation of both basic and diluted earnings per share for the years ending December 31, 2006, 2005 and 2004, is based upon weighted average shares prior to dilution, as the effect of including potentially dilutive securities in the calculation during this period would be anti-dilutive.

~~The Company also has the following potentially convertible securities which, if converted, may impact dilution:~~

~~Convertible Securities~~	~~Number of~~ ~~units issued~~	~~Conversion Features~~
~~Series A Preferred OP Units~~	~~1,325,275~~	~~Convertible to common stock at $68 per share/unit. Mandatorily redeemable on January 2, 2014~~
~~Series B-2 Preferred OP Units~~	~~100,000~~	~~Convertible into Common OP Units after January 31, 2005 at $45 per share/unit.~~

~~These potentially convertible securities are not included in the above calculation of dilutive securities as the inclusion of these securities would be anti-dilutive.~~

~~Subsequent to year-end, 100,000 Series B-2 Preferred OP Units were redeemed for cash for the total amount of $4.5 million.~~

~~F-30~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~12.~~

~~QUARTERLY FINANCIAL DATA (unaudited):~~

~~The following unaudited quarterly amounts are in thousands, except for per share amounts:~~

First
Quarter
March 31

Second
Quarter
June 30

Third
Quarter
Sept. 30

Fourth
Quarter
Dec. 31

2006

Total revenues

$
56,224

$
58,557

$
55,012

$
57,101

Total expenses

$
57,777

$
60,878

$
59,711

$
60,450

Net loss

$
(868
)
$
(1,709
)
$
(3,889
)
$
(18,502
)
Weighted average common shares outstanding

17,534

17,615

17,655

17,762

Loss per common share-basic and diluted

$
(0.05
)
$
(0.10
)
$
(0.22
)
$
(1.05
)

2005

Total revenues

$
52,610

$
51,610

$
53,283

$
53,362

Total expenses

$
50,899

$
53,475

$
56,356

$
55,379

Net income (loss)

$
687

$
(750
)
$
(3,725
)
$
(1,664
)
Weighted average common shares outstanding

17,848

17,731

17,746

17,540

Earnings (loss) per common share-basic and diluted

$
0.04

$
(0.04
)
$
(0.21
)
$
(0.09
)

~~13.~~

~~RECENT Accounting PRONOUNCEMENTS:~~

On July 13, 2006, the Financial Accounting Standards Board issued Interpretation (FIN 48), Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109. FIN 48 prescribes a consistent recognition threshold and measurement standard, as well as clear criteria for subsequently recognizing, derecognizing and measuring tax positions for financial statement purposes. FIN 48 also requires expanded disclosure with respect to the uncertainty of income taxes. FIN 48 is effective for fiscal years beginning after December 15, 2006, and must therefore be adopted by the Company for its fiscal year ended December 31, 2007. Management is currently evaluating the impact of FIN 48.

~~F-31~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~14. CONTINGENCIES:~~

~~F-32~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~14. CONTINGENCIES, continued:~~

~~15. RELATED PARTY TRANSACTIONS:~~

~~The Company and its affiliates have entered into the following transactions with Origen:~~

~~Capital Investment in Origen.~~ In 2003, the Company acquired 5,000,000 shares of common stock in Origen in a private placement transaction at $10 per share. In addition, Shiffman Origen LLC (100 percent of which is owned by the Milton M. Shiffman Spouse’s Marital Trust, Gary A. Shiffman and members of his family), acquired 1,025,000 shares of common stock of Origen at $10 per share.

~~Board Membership.~~ ~~Gary A. Shiffman, the Chairman and Chief Executive Officer of the Company, is a board member of Origen.~~

~~Loan Servicing Agreement.~~ Origen Servicing, Inc., a wholly-owned subsidiary of Origen, serviced approximately $20.6 million and $19.6 million in manufactured home loans for the Company as of December 31, 2006 and 2005, respectively. The

Company pays Origen Servicing, Inc. an annual servicing fee of 100 to 150 basis points of the outstanding principal balance of the loans pursuant to a Loan Servicing Agreement which totaled approximately $0.3 million during 2006 and 2005.

~~Loan Origination, Sale and Purchase Agreement.~~ Origen has agreed to fund loans that meet the Company’s underwriting guidelines and then transfer those loans to the Company pursuant to a Loan Origination, Sale and Purchase Agreement. During 2006 and 2005, the Company purchased $7.9 million and $7.2 million of these loans, respectively.

~~Purchase of Repossessed Manufactured Homes.~~ The Company purchases certain repossessed manufactured houses owned by Origen located its manufactured housing communities. The Company purchased approximately $1.2 million and $2.1 million of repossessed homes from Origen during 2006 and 2005, respectively. This program allows the Company to retain houses for resale and rent in its communities and allows Origen to enhance recoveries on its repossessed homes.

~~F-33~~

~~SUN COMMUNITIES, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~DECEMBER 31, 2006, 2005 AND 2004~~

~~15. RELATED PARTY TRANSACTIONS, continued:~~

~~Sale of Installment Loans on Manufactured Homes:~~ As noted above, Origen services manufactured home loans for the Company under a Loan Servicing Agreement. Certain loans may, from time to time, be sold to Origen. For loans that are made below published rates, the Company will pay Origen the interest differential between market rates and the rate paid by the borrower for any such loans sold to Origen. During 2004, the Company sold a portfolio of below published rates loans totaling $1.6 million to Origen. No sales of such loans were made in 2005 and 2006. The Company paid interest differential of approximately $0.1 million during 2006, 2005 and 2004. In addition, in the third quarter of 2006, the Company sold a portfolio of installment loans on manufactured homes totaling approximately $4.1 million to a wholly-owned subsidiary of Origen Financial, Inc. for 100.5 percent of the principal balance for loans that were 89 days or less delinquent and 100 percent of the principal balance for loans that were 90 days or more delinquent. The Company recognized a gain on the sale of these notes of $0.02 million.

~~In addition to the transactions with Origen described above, Mr. Shiffman and his affiliates have entered into the following transactions with the Company:~~

~~Related Party Lease.~~ The Company leases its executive offices in Southfield, Michigan from an entity in which Mr. Shiffman and certain of his affiliates beneficially own approximately a 21 percent interest. Arthur A. Weiss owns a 0.75 percent indirect interest in American Center LLC. The lease is a five year lease which commenced on May 1, 2003. Rent paid was approximately $52,900 per month from May 2005 to April 2006 and $54,200 per month from May 2006 through December of 2006. Rent increases of 2.5% are effective every May 1 of the lease term bringing the monthly rental payments at May 1, 2007 to approximately $55,500.

~~Tax Consequences Upon Sale of Properties.~~ Gary Shiffman holds limited partnership interests in the Operating Partnership which were received in connection with the contribution of 24 properties (four of which have been sold) from partnerships previously affiliated with him (the “Sun Partnerships”). Prior to any redemption of these limited partnership interests for the Company’s common stock, Mr. Shiffman will have tax consequences different from those of the Company and the Company’s public stockholders on the sale of any of the Sun Partnerships. Four of the properties have been sold to date.

~~16. SUBSEQUENT EVENTS:~~

~~On March 1, 2007, a $13.5 million mortgage note receivable was repaid by the borrower.~~

On January 4, 2007, a financing transaction of $17.5 million was completed. This loan is secured by a Property and has interest only payments at a rate of 5.842 percent for a term of 10 years. On January 5, 2007, a financing transaction of $20.0 million was completed. This loan is secured by a Property and has interest only payments at a rate of 5.825 percent for a term of 10 years. The proceeds from both financings were used to pay down the Company’s revolving line of credit.

~~F-34~~

~~SUN COMMUNITIES, INC.~~

~~REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III~~

~~DECEMBER 31, 2006~~

~~(amounts in thousands)~~

Initial cost to
Company

Cost capitalized
subsequent to acquisition
Improvements

Gross amount carried at
December 31, 2006

Accumulated
depreciation

Date of
construction (c)
acquisition (a)
Property Name
Location
Encumbrance
Land

Depreciable
Assets

Land

Depreciable
Assets

Land

Depreciable
Assets

Total

Academy/Westpoint
Canton, MI
A
1,485

14,278

—

2,662

1,485

16,940

18,425

(3,501
)
2000
(a)
Allendale
Allendale, MI
A
366

3,684

—

6,241

366

9,925

10,291

(2,716
)
1996
(a)
Alpine
Grand Rapids, MI
B
729

6,692

—

5,088

729

11,780

12,509

(3,508
)
1996
(a)
Apple Creek
Amelia, OH
C
543

5,480

—

942

543

6,422

6,965

(1,490
)
1999
(a)
Arbor Terrace
Bradenton, FL
B
456

4,410

—

662

456

5,072

5,528

(1,718
)
1996
(a)
Ariana Village
Lakeland, FL
B
240

2,195

—

1,276

240

3,471

3,711

(1,168
)
1994
(a)
Autumn Ridge
Ankeny, IA
A
890

8,054

(33
)
1,842

857

9,896

10,754

(3,081
)
1996
(a)
Bedford Hills
Battle Creek, MI
—
1,265

11,562

—

1,867

1,265

13,429

14,694

(4,435
)
1996
(a)
Bell Crossing
Clarksville, TN
—
717

1,916

—

5,892

717

7,808

8,525

(1,558
)
1999
(a)
Boulder Ridge
Pflugerville, TX
A
1,000

500

3,324

21,534

4,324

22,034

26,358

(4,815
)
1998
(c)
Branch Creek
Austin, TX
A
796

3,716

—

6,309

796

10,025

10,821

(3,109
)
1995
(a)
Brentwood
Kentwood, MI
B
385

3,592

—

1,154

385

4,746

5,131

(1,501
)
1996
(a)
Brookside Village
Goshen, IN
A
260

1,080

386

10,023

646

11,103

11,749

(3,475
)
1985
(a)
Buttonwood Bay
Sebring, FL
B
1,952

18,294

—

3,178

1,952

21,472

23,424

(3,913
)
2001
(a)
Byrne Hill Village
Toledo, OH
B
383

3,903

—

1,020

383

4,923

5,305

(1,171
)
1999
(a)
Byron Center
Byron Center, MI
B
253

2,402

—

713

253

3,115

3,368

(979
)
1996
(a)
Candlelight Village
Chicago Heights, IL
B
600

5,623

—

3,272

600

8,895

9,495

(2,610
)
1996
(a)
Candlewick Court
Owosso, MI
B
125

1,900

132

2,129

257

4,029

4,286

(1,417
)
1985
(a)
Carrington Pointe
Ft. Wayne, IN
A
1,076

3,632

—

6,038

1,076

9,670

10,746

(2,526
)
1997
(a)
Casa Del Valle
Alamo, TX
B
246

2,316

—

674

246

2,990

3,236

(961
)
1997
(a)
Catalina
Middletown, OH
B
653

5,858

—

3,899

653

9,757

10,410

(3,510
)
1993
(a)
Cave Creek
Evans, CO
5,838
2,241

15,343

—

5,693

2,241

21,036

23,277

(1,985
)
2004
(a)
Chisholm Point
Pflugerville, TX
A
609

5,286

—

5,808

609

11,094

11,703

(3,173
)
1995
(a)
Clearwater Village
South Bend, IN
A
80

1,270

61

3,460

141

4,730

4,871

(1,489
)
1986
(a)
Cobus Green
Elkhart, IN
—
762

7,037

—

2,835

762

9,872

10,634

(3,789
)
1993
(a)
College Park Estates
Canton, MI
—
75

800

174

6,290

249

7,090

7,339

(2,420
)
1978
(a)
Comal Farms
New Braunfels, TX
—
1,455

1,732

—

6,741

1,455

8,473

9,927

(1,331
)
2000
(a&c)
Continental Estates
Davison, MI
B
1,625

16,581

150

1,847

1,775

18,428

20,203

(5,794
)
1996
(a)
Continental North (1)
Davison, MI
B
—

—

8,648

—

8,648

8,648

(2,453
)
1996
(a)
Corporate Headquarters
Farmington Hills, MI
—
—

—

442

8,918

442

8,918

9,359

(3,990
)
Various
Country Acres
Cadillac, MI
B
380

3,495

—

1,647

380

5,142

5,522

(1,538
)
1996
(a)
Country Meadows
Flat Rock, MI
A
924

7,583

296

13,707

1,220

21,290

22,510

(6,674
)
1994
(a)
Countryside Atlanta
Lawrenceville, GA
12,950
1,274

10,957

—

1,179

1,274

12,136

13,411

(1,075
)
2004
(a)
Countryside Gwinnett
Buford, GA
—
1,124

9,539

—

1,630

1,124

11,169

12,293

(988
)
2004
(a)
Countryside Lake Lanier
Buford, GA
16,850
1,916

16,357

—

2,709

1,916

19,066

20,983

(1,637
)
2004
(a)
Countryside Village
Perry, MI
—
275

3,920

185

3,315

460

7,235

7,695

(2,640
)
1987
(a)
Creekside
Reidsville, NC
—
350

1,423

—

2,893

350

4,316

4,666

(794
)
2000
(a&c)
Creekwood Meadows
Burton, MI
B
808

2,043

404

10,298

1,212

12,341

13,553

(3,030
)
1997
(c)
Cutler Estates
Grand Rapids, MI
—
749

6,941

—

1,200

749

8,141

8,890

(2,666
)
1996
(a)
Davison East (1)
Davison, MI
B
—

—

1,189

—

1,189

1,189

(203
)
1996
(a)
Deerfield Run
Anderson, IN
1,700
990

1,607

—

4,612

990

6,219

7,209

(1,275
)
1999
(a)
Desert View Village
West Wendover, NV
—
1,119

—

—

1,722

1,119

1,722

2,841

(809
)
1998
(c)
Eagle Crest
Firestone, CO
A
2,015

150

—

28,900

2,015

29,050

31,065

(4,262
)
1998
(c)
East Fork
Batavia, OH
—
1,280

6,302

—

6,627

1,280

12,929

14,209

(2,202
)
2000
(a&c)
Edwardsville
Edwardsville, KS
—
425

8,805

541

4,481

966

13,286

14,252

(4,966
)
1987
(a)
Falcon Pointe
East Lansing, MI
2,288
450

4,049

—

906

450

4,955

5,405

(548
)
2003
(a)
Fisherman’s Cove
Flint, MI
B
380

3,438

—

1,888

380

5,326

5,706

(1,919
)
1993
(a)
Forest Meadows
Philomath, OR
B
1,031

2,050

—

933

1,031

2,983

4,014

(625
)
1999
(a)
Four Seasons
Elkhart, IN
B
500

4,811

—

1,266

500

6,077

6,577

(1,295
)
2000
(a)
Glen Laurel
Concord, NC
—
1,641

453

—

8,066

1,641

8,519

10,160

(1,209
)
2001
(a&c)

~~F-35~~

~~SUN COMMUNITIES, INC.~~

~~REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III~~

~~DECEMBER 31, 2006~~

~~(amounts in thousands)~~

Initial cost to
Company

Cost capitalized
subsequent to acquisition
Improvements

Gross amount carried at
December 31, 2006

Accumulated
depreciation

Date of
construction (c)
acquisition (a)
Property Name
Location
Encumbrance
Land

Depreciable
Assets

Land

Depreciable
Assets

Land

Depreciable
Assets

Total

Goldcoaster
Homestead, FL
B
446

4,234

172

2,230

618

6,464

7,082

(1,920
)
1997
(a)
Grand
Grand Rapids, MI
B
374

3,587

—

1,178

374

4,765

5,139

(1,381
)
1996
(a)
Groves
Ft. Myers, FL
B
249

2,396

—

868

249

3,264

3,513

(1,062
)
1997
(a)
Hamlin
Webberville, MI
B
125

1,675

536

6,854

661

8,529

9,190

(1,728
)
1984
(a)
High Point
Frederica, DE
—
898

7,031

—

3,814

898

10,845

11,743

(1,861
)
1997
(a)
Holiday Village
Elkhart, IN
A
100

3,207

143

2,171

243

5,378

5,621

(2,060
)
1986
(a)
Holly / Hawaiian Gardens
Holly, MI
B
1,514

13,596

—

431

1,514

14,027

15,541

(1,183
)
2004
(a)
Holly Forest
Holly Hill, FL
A
920

8,376

—

524

920

8,900

9,820

(2,819
)
1997
(a)
Hunters Glen
Wayland, MI
3,715
1,102

11,926

—

1,137

1,102

13,063

14,165

(1,337
)
2004
(a)
Indian Creek
Ft. Myers Beach, FL
B
3,832

34,660

—

2,926

3,832

37,586

41,418

(12,975
)
1996
(a)
Island Lake
Merritt Island, FL
B
700

6,431

—

458

700

6,889

7,589

(2,612
)
1995
(a)
Kensington Meadows
Lansing, MI
A
250

2,699

—

5,804

250

8,503

8,753

(2,425
)
1995
(a)
Kenwood
La Feria, TX
—
145

1,842

—

168

145

2,010

2,155

(530
)
1999
(a)
King’s Court
Traverse City, MI
A
1,473

13,782

—

2,396

1,473

16,178

17,651

(5,453
)
1996
(a)
King’s Lake
Debary, FL
B
280

2,542

—

2,371

280

4,913

5,193

(1,774
)
1994
(a)
Knollwood Estates
Allendale, MI
2,538
400

4,061

—

1,016

400

5,077

5,477

(905
)
2001
(a)
Lafayette Place
Warren, MI
B
669

5,979

—

2,397

669

8,376

9,045

(2,175
)
1998
(a)
Lake Juliana
Auburndale, FL
B
335

3,048

—

1,515

335

4,563

4,898

(1,587
)
1994
(a)
Lake San Marino
Naples, FL
B
650

5,760

—

849

650

6,609

7,259

(2,233
)
1996
(a)
Lakeview
Ypsilanti, MI
—
1,156

10,903

—

1,213

1,156

12,116

13,272

(1,059
)
2004
(a)
Liberty Farms
Valparaiso, IN
B
66

1,201

116

2,487

182

3,688

3,870

(1,353
)
1985
(a)
Lincoln Estates
Holland, MI
B
455

4,201

—

1,133

455

5,334

5,789

(1,730
)
1996
(a)
Maplewood Mobile
Lawrence, IN
B
275

2,122

—

1,690

275

3,812

4,087

(1,374
)
1989
(a)
Meadow Lake Estates
White Lake, MI
A
1,188

11,498

127

3,706

1,315

15,204

16,518

(6,061
)
1994
(a)
Meadowbrook
Charlotte, NC
—
1,310

6,570

—

4,792

1,310

11,362

12,672

(2,116
)
2000
(a&c)
Meadowbrook Estates
Monroe, MI
B
431

3,320

379

7,966

810

11,286

12,096

(4,192
)
1986
(a)
Meadowbrook Village
Tampa, FL
B
519

4,728

—

567

519

5,295

5,814

(2,220
)
1994
(a)
Meadows
Nappanee, IN
B
287

2,300

—

3,959

287

6,259

6,546

(2,167
)
1987
(a)
North Point Estates
Pueblo, CO
—
1,582

3,027

—

4,002

1,583

7,029

8,612

(1,234
)
2001
(c)
Oak Crest
Austin, TX
—
4,311

12,611

—

3,586

4,311

16,197

20,508

(2,482
)
2002
(a)
Oakwood Village
Miamisburg, OH
A
1,964

6,401

—

8,994

1,964

15,395

17,359

(3,544
)
1998
(a)
Orange Tree
Orange City, FL
B
283

2,530

15

963

298

3,493

3,791

(1,308
)
1994
(a)
Orchard Lake
Milford, OH
C
395

4,025

—

247

395

4,272

4,667

(1,138
)
1999
(a)
Pebble Creek
Greenwood, IN
—
1,030

5,074

—

4,192

1,030

9,266

10,296

(1,871
)
2000
(a&c)
Pecan Branch
Georgetown, TX
—
1,379

—

235

4,479

1,614

4,479

6,093

(789
)
1999
(c)
Pheasant Ridge
Lancaster, PA
B
2,044

19,279

—

211

2,044

19,490

21,535

(2,993
)
2002
(a)
Pin Oak Parc
O’Fallon, MO
A
1,038

3,250

467

6,643

1,505

9,893

11,398

(2,933
)
1994
(a)
Pine Hills
Middlebury, IN
—
72

544

60

3,235

132

3,779

3,911

(1,177
)
1980
(a)
Pine Ridge
Petersburg, VA
B
405

2,397

—

2,853

405

5,250

5,655

(1,731
)
1986
(a)
Pine Trace
Houston, TX
6,254
2,907

17,169

—

1,203

2,907

18,372

21,278

(1,989
)
2004
(a)
Presidential
Hudsonville, MI
A
680

6,314

—

2,951

680

9,265

9,945

(2,876
)
1996
(a)
Richmond
Richmond, MI
B
501

2,040

—

948

501

2,988

3,489

(777
)
1998
(a)
River Haven
Grand Haven, MI
9,137
1,800

16,967

—

2,792

1,800

19,759

21,559

(3,670
)
2001
(a)
River Ranch
Austin, TX
—
4,690

843

—

8,522

4,690

9,365

14,055

(1,042
)
2000
(a&c)
River Ridge
Austin, TX
—
3,201

15,090

—

3,819

3,201

18,909

22,110

(3,097
)
2002
(a)
Roxbury
Goshen, IN
A
1,057

9,870

—

1,592

1,058

11,462

12,520

(2,094
)
2001
(a)
Royal Country
Miami, FL
54,000
2,290

20,758

—

1,274

2,290

22,032

24,322

(9,452
)
1994
(a)

~~F-36~~

~~SUN COMMUNITIES, INC.~~

~~REAL ESTATE AND ACCUMULATED DEPRECIATION, SCHEDULE III~~

~~DECEMBER 31, 2006~~

~~(amounts in thousands)~~

Initial cost to
Company

Cost capitalized
subsequent to acquisition
Improvements

Gross amount carried at
December 31, 2006

Accumulated
depreciation

Date of
construction (c)
acquisition (a)
Property Name
Location
Encumbrance
Land

Depreciable
Assets

Land

Depreciable
Assets

Land

Depreciable
Assets

Total

Saddle Oak Club
Ocala, FL
A

730

6,743

—

970

730

7,713

8,443

(3,014
)
1995
(a)
Saddlebrook
San Marcos, TX
—

1,703

11,843

—

4,320

1,703

16,163

17,867

(2,391
)
2002
(a)
Scio Farms
Ann Arbor, MI
B

2,300

22,659

—

5,703

2,300

28,362

30,662

(10,048
)
1995
(a)
Sea Air
Rehoboth Beach, DE
—

1,207

10,179

—

1,258

1,207

11,437

12,644

(2,155
)
1997
(a)
Sheffield
Auburn Hills, MI
4,500

778

7,165

—

120

778

7,285

8,062

(141
)
2006
(a)
Sherman Oaks
Jackson, FL
—

200

2,400

240

5,776

440

8,176

8,616

(2,915
)
1986
(a)
Siesta Bay
Ft. Myers Beach, FL
B

2,051

18,549

—

1,379

2,051

19,928

21,979

(6,925
)
1996
(a)
Silver Star
Orlando, FL
B

1,022

9,306

—

698

1,022

10,004

11,026

(3,459
)
1996
(a)
Snow to Sun
Weslaco, TX
B

190

2,143

13

1,087

203

3,230

3,433

(996
)
1997
(a)
Southfork
Belton, MO
B

1,000

9,011

—

3,399

1,000

12,410

13,410

(3,209
)
1997
(a)
St. Clair Place
St. Clair, MI
B

501

2,029

—

680

501

2,709

3,210

(884
)
1998
(a)
Stonebridge
San Antonio, TX
—

2,515

2,096

—

7,542

2,515

9,638

12,153

(1,590
)
2000
(a&c)
Stonebridge
Richfield Twp., MI
—

2,044

—

2,122

—

4,166

—

4,166

—

1998
(c)
Summit Ridge
Converse, TX
—

2,615

2,092

—

7,041

2,615

9,133

11,748

(1,571
)
2000
(a&c)
Sun Villa
Reno, NV
18,300

2,385

11,773

—

1,081

2,385

12,854

15,239

(3,489
)
1998
(a)
Sunset Ridge
Kyle, TX
—

2,190

2,775

—

6,363

2,190

9,138

11,328

(1,694
)
2000
(a&c)
Sunset Ridge
Portland, MI
—

2,044

—

—

14,259

2,044

14,259

16,302

(2,311
)
1998
(c)
Tampa East
Tampa, FL
—

734

6,310

—

1,105

734

7,415

8,149

(417
)
2005
(a)
Timber Ridge
Ft. Collins, CO
A

990

9,231

—

3,059

990

12,290

13,280

(3,898
)
1996
(a)
Timberbrook
Bristol, IN
—

490

3,400

101

8,463

591

11,863

12,454

(4,196
)
1987
(a)
Timberline Estates
Grand Rapids, MI
A

535

4,867

—

1,838

536

6,705

7,241

(2,446
)
1994
(a)
Town and Country
Traverse City, MI
B

406

3,736

—

502

406

4,238

4,644

(1,439
)
1996
(a)
Valley Brook
Indianapolis, IN
A

150

3,500

1,277

12,024

1,427

15,524

16,951

(5,477
)
1989
(a)
Village Trails
Howard City, MI
B

988

1,472

—

1,559

988

3,031

4,018

(773
)
1998
(a)
Water Oak
Lady Lake, FL
A

2,834

16,706

(161
)

11,317

2,673

28,023

30,696

(10,505
)
1993
(a)
West Glen Village
Indianapolis, IN
B

1,100

10,028

—

3,072

1,100

13,100

14,200

(4,793
)
1994
(a)
Westbrook
Toledo, OH
A

1,110

10,462

—

2,255

1,110

12,717

13,827

(3,139
)
1999
(a)
Westbrook Senior
Toledo, OH
A

355

3,295

—

409

355

3,704

4,060

(687
)
2001
(a)
White Lake
White Lake, MI
A

672

6,179

1

6,056

673

12,235

12,907

(3,148
)
1997
(a)
White Oak
Mt. Morris, MI
A

782

7,245

373

5,435

1,155

12,680

13,835

(3,499
)
1997
(a)
Willowbrook
Toledo, OH
A

781

7,054

1

1,819

782

8,873

9,654

(2,327
)
1997
(a)
Windham Hills
Jackson, MI
A

2,673

2,364

—

12,063

2,673

14,427

17,100

(3,267
)
1998
(a)
Woodhaven Place
Woodhaven, MI
A

501

4,541

—

2,038

501

6,579

7,080

(1,671
)
1998
(a)
Woodlake Estates
Yoder, IN
B

632

3,674

—

3,704

632

7,378

8,010

(1,844
)
1998
(a)
Woodlake Trails
San Antonio, TX
—

1,186

287

160

4,492

1,346

4,779

6,126

(832
)
2000
(a&c)
Woodland Park Estates
Eugene, OR
5,986

1,592

14,398

1

2,355

1,593

16,753

18,345

(4,556
)
1998
(a)
Woods Edge
West Lafayette, IN
B

100

2,600

3

9,893

103

12,493

12,596

(3,616
)
1985
(a)
Woodside Terrace
Holland, OH
A

1,064

9,625

—

2,767

1,064

12,392

13,456

(3,642
)
1997
(a)
Worthington Arms
Lewis Center, OH
A

376

2,624

—

1,981

376

4,605

4,981

(1,719
)
1990
(a)

$
136,202

$
839,284

$
12,443

$
524,833

$
148,645

$
1,364,117

$
1,512,762
$
(351,113
)

~~A These communities collateralize $385.3 million of secured debt.~~

~~B These communities collateralize $492.7 million of secured debt.~~

~~C These communities collateralize $4.4 million of secured debt.~~

⁽¹⁾ ~~The initial cost for this property is included in the initial cost reported for Continental Estates.~~

~~F-37~~

~~SUN COMMUNITIES, INC.~~

~~REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED~~

~~DECEMBER 31, 2006~~

~~(amounts in thousands)~~

~~The change in investment property for the years ended December 31, 2006, 2005, and 2004 is as follows:~~

2006

2005

2004

Balance, beginning of year

$
1,458,122

$
1,380,553

$
1,220,405

Community and land acquisitions, including
immediate improvements

8,012

9,759

118,222

Community expansion and development

3,052

3,633

11,606

Improvements, other

54,380

82,119

54,768

Dispositions and other

(10,804
)

(17,942
)

(24,448
)
Balance, end of year

$
1,512,762

$
1,458,122

$
1,380,553

~~The change in accumulated depreciation for the years ended December 31, 2006, 2005, and 2004 is as follows:~~

2006

2005

2004

Balance, beginning of year

$
296,302

$
248,597

$
209,921

Depreciation for the year

56,784

50,473

40,788

Dispositions and other

(1,973
)

(2,768
)

(2,112
)
Balance, end of year

$
351,113

$
296,302

$
248,597

~~F-38~~

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

Item 10	Directors, Executive Officers and Corporate Governance
Item 11	Executive Compensation
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13	Certain Relationships and Related Transactions, and Director Independence
Item 14	Principal Accounting Fees and Services

	Developed	Occupancy	Occupancy	Occupancy
	Sites as of	as of	as of	as of
Property and Location	12/31/2006	12/31/06⁽¹⁾	12/31/05⁽¹⁾	12/31/04⁽¹⁾

MIDWEST
Michigan
Academy/West Pointe	441	94%	98%	95%
Canton, MI
Allendale Meadows Mobile Village	352	81%	84%	85%
Allendale, MI
Alpine Meadows Mobile Village	403	87%	94%	91%
Grand Rapids, MI
Bedford Hills Mobile Village	339	79%	85%	86%
Battle Creek, MI
Brentwood Mobile Village	195	95%	92%	94%
Kentwood, MI
Byron Center Mobile Village	143	91%	96%	97%
Byron Center, MI
Candlewick Court	211	87%	89%	88%
Owosso, MI
College Park Estates	230	74%	77%	79%
Canton, MI
Continental Estates	385	49%	54%	63%
Davison, MI
Continental North	474	58%	59%	67%
Davison, MI
Country Acres Mobile Village	182	88%	91%	95%
Cadillac, MI
Country Meadows Mobile Village	577	91%	92%	94%
Flat Rock, MI
Countryside Village	359	81%	89%	92%
Perry, MI
Creekwood Meadows	336	63%	67%	72%
Burton, MI
Cutler Estates Mobile Village	259	83%	91%	92%
Grand Rapids, MI
Davison East	190	63%	67%	73%
Davison, MI
Falcon Pointe⁽⁸⁾	142	19%⁽⁸⁾	19%⁽⁸⁾	22%⁽⁸⁾
East Lansing, MI
Fisherman’s Cove	162	80%	86%	90%
Flint, MI
Grand Mobile Estates	230	79%	85%	80%
Grand Rapids, MI
Hamlin⁽⁴⁾	209	75%⁽⁴⁾	78%⁽⁴⁾	91%⁽⁴⁾
Webberville, MI
Holly Village/Hawaiian Gardens	425	97%	99%	98%
Holly, MI
Hunters Glen⁽⁸⁾	280	43%⁽⁸⁾	46%⁽⁸⁾	44%⁽⁸⁾
Wayland, MI
Kensington Meadows	290	81%	88%	82%
Lansing, MI
Kings Court Mobile Village	639	97%	98%	97%
Traverse City, MI

	High		Low		Distribution
Fiscal Year Ended December 31, 2005
First Quarter of 2005	$	39.60	$	34.70	$	0.61
Second Quarter of 2005		38.20		34.45		0.63
Third Quarter of 2005		38.75		31.27		0.63
Fourth Quarter of 2005		32.83		29.51		0.63

Fiscal Year Ended December 31, 2006
First Quarter of 2006	$	36.71	$	31.32	$	0.63
Second Quarter of 2006		34.31		30.57		0.63
Third Quarter of 2006		33.12		31.01		0.63
Fourth Quarter of 2006		35.34		31.81		0.63

	2001	2002	2003	2004	2005	2006
SUN COMMUNITIES, INC.	100.00	104.28	117.53	130.36	109.10	121.38
HEMSCOTT GROUP INDEX	100.00	94.82	119.90	159.09	175.20	242.05
NYSE MARKET INDEX	100.00	81.69	105.82	119.50	129.37	151.57

	Year Ended December 31,
	2006 ^(b)			2005^(b)			2004^(a,b)			2003^(a,b)		2002^(a)
	(In thousands except for per share and other data)
OPERATING DATA:
Revenues	$	226,894		$	210,865		$	203,348		$	193,503	$	159,629
Income (loss) from continuing operations	$	(25,257	)	$	(6,276	)	$	(40,605	)	$	13,702	$	11,923
Net income (loss)	$	(24,968	)	$	(5,452	)	$	(40,468	)	$	23,714	$	13,592
Income (loss) from continuing operations per share:
Basic	$	(1.44	)	$	(0.35	)	$	(2.22	)	$	0.75	$	0.68
Diluted	$	(1.44	)	$	(0.35	)	$	(2.22	)	$	0.75	$	0.67

Distributions per common share	$	2.52		$	2.50		$	2.44		$	2.41	$	2.29

BALANCE SHEET DATA:
Investment property, before accumulated depreciation	$	1,512,762		$	1,458,122		$	1,380,553		$	1,220,405	$	1,174,837
Total assets	$	1,289,739		$	1,320,536		$	1,403,167		$	1,221,574	$	1,163,976
Total debt	$	1,166,850		$	1,123,468		$	1,078,442		$	773,328	$	667,373
Stockholders’ equity	$	79,197		$	143,257		$	211,746		$	326,610	$	319,532

OTHER FINANCIAL DATA:
Income from real property operations ^(c)	$	123,550		$	118,721		$	111,848		$	107,306	$	105,671
Income from home sales and home rentals ^(c)	$	8,233		$	6,236		$	4,615		$	6,898	$	—
Funds from operations (FFO) ^(d)	$	34,560		$	51,313		$	(3,295	)	$	65,525	$	69,233
FFO per weighted average Common Share/OP Unit:
Basic	$	1.74		$	2.54		$	(0.16	)	$	3.16	$	3.43
Diluted	$	1.72		$	2.54		$	(0.16	)	$	3.14	$	3.40

OTHER DATA (at end of period):
Total properties		136			135			136			127		129
Total sites		47,606			47,385			46,856			43,875		43,959

	Same Property										Total Portfolio
	2006					2005					2006					2005
	(in thousands)										(in thousands)
Income from real property	$	176,399				$	170,712				$	186,326				$	178,985
Property operating expenses:
Property operating and maintenance		35,898					34,947					46,916					45,091
Real estate taxes		15,465					14,912					15,860					15,173
Property operating expenses		51,363					49,859					62,776					60,264

Real property net operating income ⁽¹⁾	$	125,036				$	120,853				$	123,550				$	118,721

Number of properties		133					133					136					135
Developed sites		46,538					46,544					47,606					47,385
Occupied sites		37,506		⁽²	⁾		37,999		⁽²	⁾		37,906		⁽²	⁾		38,190		⁽²	⁾
Occupancy %		82.6	%	⁽³	⁾		83.9	%	⁽³	⁾		82.5	%	⁽³	⁾		83.7	%	⁽³	⁾
Weighted average monthly rent per site	$	368		⁽³	⁾	$	355		⁽³	⁾	$	368		⁽³	⁾	$	355		⁽³	⁾
Sites available for development		6,315					6,342					6,813					6,942
Sites planned for development in next year		25					99					25					99

			Payments Due By Period (in thousands)
Contractual Cash Obligations	Total Due		1 year		2-3 years		4-5 years		After 5 years
Collateralized term loan - FNMA	$	385,299	$	3,776	$	8,093	$	8,928	$	364,502
Collateralized term loan - B of A		492,749		6,499		14,743		119,132		352,375
Mortgage notes, other		148,455		18,128		18,967		1,020		110,340
Line of credit		86,400		—		86,400		—		—
Redeemable Preferred OP Units		53,947		4,500		4,770		8,895		35,782
Operating leases		1,063		841		222		—		—
	$	1,167,913	$	33,744	$	133,195	$	137,975	$	862,999

10.17	Employment Agreement between Sun Communities, Inc. and Jeffrey P. Jorissen, dated as of January 1, 2005#	(17)
10.18	Employment Agreement by and between Brian W. Fannon and Sun Communities, Inc., dated as of January 1, 2005#	(17)
10.19	Long Term Incentive Plan	(7)
10.20	Sun Communities, Inc. 1998 Stock Purchase Plan#	(9)
10.21	Rights Agreement between Sun Communities, Inc. and State Street Bank and Trust Company, dated April 24, 1998	(8)
10.22	One Hundred Third Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership	(11)
10.23	One Hundred Eleventh Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership	(12)
10.24	One Hundred Thirty-Sixth Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership	(12)
10.25	One Hundred Forty-Fifth Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership	(12)
10.26	One Hundred Seventy-Second Amendment to Second Amended and Restated Limited Partnership Agreement of the Operating Partnership	(19)
10.27	Restricted Stock Award Agreement between Sun Communities, Inc. and Gary A. Shiffman, dated May 10, 2004#	(19)
10.28	First Amendment to Restricted Stock Award Agreement between Sun Communities, Inc., and Gary A. Shiffman#	(19)
10.29	Restricted Stock Award Agreement between Sun Communities, Inc. and Jeffrey P. Jorissen, dated May 10, 2004#	(19)
10.30	First Amendment to Restricted Stock Award Agreement between Sun Communities, Inc. and Jeffrey P. Jorissen#	(19)
10.31	Form of Loan Agreement dated June 9, 2004 by and among Sun Candlewick LLC, Sun Silver Star LLC and Aspen-Holland Estates, LLC, as Borrowers, and Bank of America, N.A., as Lender	(15)
10.32	Schedule identifying substantially identical agreements to Exhibit 10.31	(15)
10.33	Form of Loan Agreement dated June 9, 2004 by and between Sun Pool 8 LLC, as Borrower, and Bank of America, N.A., as Lender	(15)
10.34	Schedule identifying substantially identical agreements to Exhibit 10.33	(15)
10.35	Form of Loan Agreement dated June 9, 2004 by and between Sun Continental Estates LLC as Borrower, and Bank of America, N.A., as Lender	(15)
10.36	Schedule identifying substantially identical agreements to Exhibit 10.35	(15)
10.37	Form of Loan Agreement dated June 9, 2004 by and between Sun Indian Creek LLC, as Borrower, and Bank of America, N.A., as Lender	(15)
10.38	Schedule identifying substantially identical agreements to Exhibit 10.37	(15)
10.39	Amended And Restated Master Credit Facility Agreement dated April 28, 2004 by and among Sun Secured Financing LLC, Aspen Ft. Collins Limited Partnership, Sun Secured Financing Houston Limited Partnership, Sun Communities Finance, LLC, Sun Holly Forest LLC, Sun Saddle Oak LLC, as Borrowers, and Arcs Commercial Mortgage Co., L.P., as Lender	(15)
10.40	Appendix I (definitions) to Amended And Restated Master Credit Facility Agreement dated April 28, 2004 by and among Sun Secured Financing LLC, Aspen Ft. Collins Limited Partnership, Sun Secured Financing Houston Limited Partnership, Sun Communities Finance, LLC, Sun Holly Forest LLC, Sun Saddle Oak LLC, as Borrowers, and Arcs Commercial Mortgage Co., L.P., as Lender	(15)
10.41	Fixed Facility Note dated April 5, 2004 made by Sun Secured Financing LLC, Aspen – Ft. Collins Limited Partnership and Sun Secured Financing Houston Limited Partnership, in favor of Arcs Commercial Mortgage Co., L.P., in the original principal amount of $77,362,500	(15)

10.42	Fixed Facility Note dated April 28, 2004 made by Sun Secured Financing LLC, Sun Secured Financing Houston Limited Partnership, Aspen – Ft. Collins Limited Partnership, Sun Communities Finance LLC, Sun Holly Forest LLC and Sun Saddle Oak LLC, in favor of Arcs Commercial Mortgage Co., L.P., in the original principal amount of $100,000,000	(15)
10.43	Variable Facility Note dated April 28, 2004 made by Sun Secured Financing LLC, Sun Secured Financing Houston Limited Partnership, Aspen – Ft. Collins Limited Partnership, Sun Communities Finance LLC, Sun Holly Forest LLC and Sun Saddle Oak LLC, in favor of Arcs Commercial Mortgage Co., L.P., in the original principal amount of $60,275,000	(15)
10.44	Fourth Amended and Restated Variable Facility Note dated April 28, 2004 made by Sun Secured Financing LLC, Sun Secured Financing Houston Limited Partnership, Aspen – Ft. Collins Limited Partnership, Sun Communities Finance LLC, Sun Holly Forest LLC and Sun Saddle Oak LLC, in favor of Arcs Commercial Mortgage Co., L.P., in the original principal amount of $152,362,500	(15)
10.45	Credit Agreement, dated September 30, 2004, among the Company, the Operating Partnership, Standard Federal Bank National Association, LaSalle Bank National Association and other lenders	(16)
10.46	Second Amended and Restated Promissory Note (Secured), dated as of July 15, 2002, made by Gary A. Shiffman in favor of the Operating Partnership	(13)
10.47	First Amended and Restated Promissory Note (Unsecured), dated as of July 15, 2002, made by Gary A. Shiffman in favor of the Operating Partnership	(13)
10.48	First Amended and Restated Promissory Note (Secured), dated as of July 15, 2002, made by Gary A. Shiffman in favor of the Operating Partnership	(13)
10.49	Second Amended and Restated Promissory Note (Unsecured), dated as of July 15, 2002, made by Gary A. Shiffman in favor of the Operating Partnership	(13)
10.50	Second Amended and Restated Promissory Note (Secured), dated as of July 15, 2002, made by Gary A. Shiffman in favor of the Operating Partnership	(13)
10.51	Lease, dated November 1, 2002, by and between the Operating Partnership as Tenant and American Center LLC as Landlord	(14)
10.52	Concurrent Private Placement Agreement dated October 8, 2003 among Sun OFI, Inc., Origen Financial, Inc., and the Purchasers (as defined therein)	(18)
10.53	Registration Rights Agreement dated as of October 8, 2003 among Sun OFI, Inc., Origen Financial, Inc., Lehman Brothers Inc., on behalf of itself and as agent for the investors listed on Schedule A thereto and those persons listed on Schedule B thereto	(18)
10.54	Agreement for Wholesale Financing, dated March 1, 2006, by and between Sun Home Services, Inc. and Textron Financial Corporation	(21)
10.55	Promissory Note dated July 10, 2006 made by Sun Villa MHC LLC in favor of ARCS Commercial Mortgage Co., L.P., in the original principal amount of $18,300,000	(22)
10.56	Promissory Note dated July 10, 2006 made by Sun Countryside Atlanta LLC in favor of ARCS Commercial Mortgage Co., L.P., in the original principal amount of $12,950,000	(22)
10.57	Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated July 10, 2006, made by Sun Villa MHC LLC in favor of ARCS Commercial Mortgage Co., L.P.	(22)

10.58	Deed to Secure Debt and Security Agreement dated July 10, 2006 made by Sun Countryside Atlanta LLC in favor of ARCS Commercial Mortgage Co., L.P.	(22)
21.1	List of Subsidiaries of Sun Communities, Inc.	(23)
23.1	Consent of Grant Thornton LLP	(23)
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	(23)
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	(23)
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	(23)

	2006			2005
ASSETS
Investment property, net	$	1,161,649		$	1,161,820
Cash and cash equivalents		3,183			5,880
Inventory of manufactured homes		12,082			17,105
Investment in affiliate		29,319			46,352
Notes and other receivables		41,407			41,134
Other assets		42,099			48,245

Total assets	$	1,289,739		$	1,320,536

LIABILITIES
Debt	$	1,080,450		$	1,050,168
Line of credit		86,400			73,300
Other liabilities		31,301			32,267

Total liabilities		1,198,151			1,155,735

Minority interest		12,391			21,544

STOCKHOLDERS’ EQUITY
Preferred stock, $.01 par value, 10,000 shares authorized, none issued	$	—		$	—
Common stock, $.01 par value, 90,000 shares authorized, 20,028 and 19,814 issued in 2006 and 2005, respectively		200			198
Additional paid-in capital		452,882			460,568
Officer’s notes		(9,083	)		(9,427	)
Unearned compensation		—			(13,187	)
Accumulated comprehensive earnings		820			532
Distributions in excess of accumulated earnings		(302,022	)		(231,827	)
Treasury stock, at cost, 1,802 shares in 2006 and 2005		(63,600	)		(63,600	)

Total stockholders’ equity		79,197			143,257

Total liabilities and stockholders’ equity	$	1,289,739		$	1,320,536

	Common Stock		Additional Paid-in Capital			Officer’s Notes			Unearned Compensation			Accumulated Comprehensive Earnings (Loss)			Distributions in Excess of Accumulated Earnings			Treasury Stock			Total Equity
Balance, January 1, 2004	$	192	$	446,211		$	(10,299	)	$	(7,337	)	$	(1,294	)	$	(94,479	)	$	(6,384	)	$	326,610
Issuance of common stock, net		4		13,455						(10,331	)											3,128
Amortization and forfeitures										2,111												2,111
Repayment of officer’s notes							501															501
Treasury stock purchased, 1,000 shares																			(37,201	)		(37,201	)
Reclassification and conversion of minority interest				2,856																		2,856
Net loss																(40,468	)					(40,468	)
Unrealized income on interest rate swaps													335									335
Cash distributions declared of $2.44 per share																(46,126	)					(46,126	)
Balance, December 31, 2004	$	196	$	462,522		$	(9,798	)	$	(15,557	)	$	(959	)	$	(181,073	)	$	(43,585	)	$	211,746
Issuance of common stock, net		2		2,043																		2,045
Amortization and forfeitures										2,370												2,370
Repayment of officer’s notes							371															371
Treasury stock purchased, 600 shares																			(20,015	)		(20,015	)
Reclassification and conversion of minority interest				(3,997	)																	(3,997	)
Net loss																(5,452	)					(5,452	)
Unrealized income on interest rate swaps													1,491									1,491
Cash distributions declared of $2.50 per share																(45,302	)					(45,302	)
Balance, December 31, 2005	$	198	$	460,568		$	(9,427	)	$	(13,187	)	$	532		$	(231,827	)	$	(63,600	)	$	143,257
Issuance of common stock, net		1		2,052																		2,054
Exercise of stock options		1		1,984																		1,984
Reclassification of unearned compensation on adoption of SFAS 123R				(13,187	)					13,187												—
Stock-based compensation - amortization and forfeitures				2,600																		2,600
Repayment of officer’s notes							344															344
Reclassification and conversion of minority interest				(1,135	)																	(1,135	)
Net loss																(24,968	)					(24,968	)
Unrealized income on interest rate swaps													288									288
Cash distributions declared of $2.52 per share																(45,227	)					(45,227	)
Balance, December 31, 2006	$	200	$	452,882		$	(9,083	)	$	—		$	820		$	(302,022	)	$	(63,600	)	$	79,197

	(Unaudited) 2006			2005			2004
Loans receivable	$	950,226		$	768,410		$	563,268
Other assets		122,841			124,593			119,279
Total assets	$	1,073,067		$	893,003		$	682,547

Warehouse and securitization financing	$	816,533		$	643,914		$	435,761
Repurchase agreements		23,582			23,582			20,153
Other liabilities		28,488			25,556			23,167
Total liabilities		868,603			693,052			479,081
Equity		204,464			199,951			203,466
Total liabilities and equity	$	1,073,067		$	893,003		$	682,547

Revenues	$	92,082		$	74,042		$	53,663
Expenses		85,111			76,701			56,629
Net income (loss)	$	6,971		$	(2,659	)	$	(2,966	)
Sun’s equity income (loss)	$	(16,583	)	$	(908	)	$	(151	)

	At December 31,
	2006			2005
Land	$	117,563		$	116,738
Land improvements and buildings		1,175,045			1,156,612
Rental homes and improvements		151,843			117,314
Furniture, fixtures, and equipment		37,229			36,120
Land held for future development		31,082			31,082
Property under development		—			256
		1,512,762			1,458,122
Less accumulated depreciation		(351,113	)		(296,302	)
Investment property, net	$	1,161,649		$	1,161,820

	2005			2004
Net loss, as reported	$	(5,452	)	$	(40,468	)
Stock-based compensation expense included in net loss as reported	$	1,843		$	1,968
Stock-based compensation expense under fair value method		(1,900	)		(2,030	)
Pro forma net loss	$	(5,509	)	$	(40,530	)

Loss per share (Basic and Diluted), as reported	$	(0.31	)	$	(2.21	)
Loss per share (Basic and Diluted), pro forma	$	(0.31	)	$	(2.21	)

	Number of Shares		Weighted Average Grant Date Fair Value
Nonvested restricted shares at January 1, 2006	417,275		$	34.91
Granted	—
Vested	(65,680	)	$	34.44
Forfeited	(5,500	)	$	34.25
Nonvested restricted shares at December 31, 2006	346,095		$	35.01

	2006	2005	May 2004 award
Estimated fair value per share of options granted during year:	N/A	N/A	$	2.49

Assumptions:
Annualized dividend yield	N/A	N/A		6.80	%
Common stock price volatility	N/A	N/A		16.50	%
Risk-free rate of return	N/A	N/A		3.18	%
Expected option term (in years)	N/A	N/A		3

	Number of options		Weighted Average Exercise Price (per common share)		Weighted Average Contractual Term (in years)	Aggregate Intrinsic Value (in 000’s)
Options outstanding at January 1, 2006	614,839		$	29.73
Granted	—
Exercised	(384,108	)	$	28.57
Forfeited	(7,184	)	$	32.91
Options outstanding at December 31, 2006	223,547		$	31.62	3.5	$	719

Options vested and exercisable at December 31, 2006	223,547		$	31.62	3.5	$	719

	March 2006 award			May 2006 award			2005	May 2004 award
Estimated fair value per share of options granted during year:	$	3.59		$	2.31		N/A	$	3.64

Assumptions:
Annualized dividend yield		7.19	%		8.20	%	N/A		6.80	%
Common stock price volatility		17.04	%		17.05	%	N/A		16.97	%
Risk-free rate of return		4.68	%		5.05	%	N/A		4.33	%
Expected option term (in years)		7.5			7.5		N/A		7

	Year ended December 31, 2006
	Real Property Operations			Home Sales and Home Rentals			Consolidated
Revenues	$	186,326		$	35,418		$	221,744
Operating expenses/Cost of sales		62,776			27,185			89,961
Net operating income ⁽¹⁾/Gross profit		123,550			8,233			131,783
Adjustments to arrive at net loss:
Other revenues		4,497			653			5,150
General and administrative		(16,406	)		(6,311	)		(22,717	)
Depreciation and amortization		(45,571	)		(14,729	)		(60,300	)
Debt extinguishment costs		(486	)		—			(486	)
Deferred financing costs related to extinguished debt		(234	)		—			(234	)
Interest expense		(64,762	)		(356	)		(65,118	)
Equity loss from affiliate		(16,583	)		—			(16,583	)
Loss allocated to minority interest		3,248			—			3,248
Net loss from continuing operations	$	(12,747	)	$	(12,510	)	$	(25,257	)
Cumulative effect of change in accounting principle		289			—			289
Net loss	$	(12,458	)	$	(12,510	)	$	(24,968	)

	Year ended December 31, 2005
	Real Property Operations			Home Sales and Home Rentals			Consolidated
Revenues	$	178,985		$	27,469		$	206,454
Operating expenses/Cost of sales		60,264			21,233			81,497
Net operating income ⁽¹⁾/Gross profit		118,721			6,236			124,957
Adjustments to arrive at net income (loss):
Other revenues		2,977			1,434			4,411
General and administrative		(14,493	)		(6,207	)		(20,700	)
Depreciation and amortization		(44,736	)		(9,594	)		(54,330	)
Interest expense		(59,728	)		(244	)		(59,972	)
Florida storm damage		390			—			390
Equity loss from affiliate		(908	)		—			(908	)
Income allocated to minority interest		(124	)		—			(124	)
Net income (loss) from continuing operations	$	2,099		$	(8,375	)	$	(6,276	)
Income from discontinued operations		818			6			824
Net income (loss)	$	2,917		$	(8,369	)	$	(5,452	)

	Year ended December 31, 2004
	Real Property Operations			Home Sales and Home Rentals			Consolidated
Revenues	$	167,145		$	22,225		$	189,370
Operating expenses/Cost of sales		55,297			17,610			72,907
Net operating income ⁽¹⁾/Gross profit		111,848			4,615			116,463
Adjustments to arrive at net income (loss):
Other revenues		7,084			6,894			13,978
General and administrative		(12,559	)		(8,070	)		(20,629	)
Depreciation and amortization		(43,746	)		(1,471	)		(45,217	)
Debt extinguishment costs		(51,643	)		—			(51,643	)
Deferred financing costs related to extinguished debt		(5,557	)		—			(5,557	)
Interest expense		(48,025	)		(168	)		(48,193	)
Florida storm damage		(600	)		—			(600	)
Equity loss from affiliate		(151	)		—			(151	)
Loss allocated to minority interest		944			—			944
Net income (loss) from continuing operations	$	(42,405	)	$	1,800		$	(40,605	)
Income from discontinued operations		105			32			137
Net income (loss)	$	(42,300	)	$	1,832		$	(40,468	)

Selected balance sheet data	December 31, 2006							December 31, 2005
	Real Property Operations		Home Sales and Home Rentals			Consolidated		Real Property Operations		Home Sales and Home Rentals			Consolidated
Identifiable assets:
Investment property, net	$	1,031,771	$	129,878		$	1,161,649	$	1,052,603	$	109,217		$	1,161,820
Cash and cash equivalents		3,457		(274	)		3,183		6,125		(245	)		5,880
Inventory of manufactured homes		—		12,082			12,082		—		17,105			17,105
Investment in affiliate		29,319		—			29,319		46,352		—			46,352
Notes and other receivables		40,583		824			41,407		34,460		6,674			41,134
Other assets		40,921		1,178			42,099		47,129		1,116			48,245
Total assets	$	1,146,051	$	143,688		$	1,289,739	$	1,186,669	$	133,867		$	1,320,536

	First Quarter March 31			Second Quarter June 30			Third Quarter Sept. 30			Fourth Quarter Dec. 31
2006
Total revenues	$	56,224		$	58,557		$	55,012		$	57,101
Total expenses	$	57,777		$	60,878		$	59,711		$	60,450
Net loss	$	(868	)	$	(1,709	)	$	(3,889	)	$	(18,502	)
Weighted average common shares outstanding		17,534			17,615			17,655			17,762
Loss per common share-basic and diluted	$	(0.05	)	$	(0.10	)	$	(0.22	)	$	(1.05	)

2005
Total revenues	$	52,610		$	51,610		$	53,283		$	53,362
Total expenses	$	50,899		$	53,475		$	56,356		$	55,379
Net income (loss)	$	687		$	(750	)	$	(3,725	)	$	(1,664	)
Weighted average common shares outstanding		17,848			17,731			17,746			17,540
Earnings (loss) per common share-basic and diluted	$	0.04		$	(0.04	)	$	(0.21	)	$	(0.09	)

			Initial cost to Company			Cost capitalized subsequent to acquisition Improvements				Gross amount carried at December 31, 2006						Accumulated depreciation			Date of construction (c) acquisition (a)
Property Name	Location	Encumbrance	Land		Depreciable Assets	Land		Depreciable Assets		Land		Depreciable Assets		Total
Academy/Westpoint	Canton, MI	A	1,485	14,278		—		2,662	1,485		16,940		18,425		(3,501		)	2000		(a)
Allendale	Allendale, MI	A	366	3,684		—		6,241	366		9,925		10,291		(2,716		)	1996		(a)
Alpine	Grand Rapids, MI	B	729	6,692		—		5,088	729		11,780		12,509		(3,508		)	1996		(a)
Apple Creek	Amelia, OH	C	543	5,480		—		942	543		6,422		6,965		(1,490		)	1999		(a)
Arbor Terrace	Bradenton, FL	B	456	4,410		—		662	456		5,072		5,528		(1,718		)	1996		(a)
Ariana Village	Lakeland, FL	B	240	2,195		—		1,276	240		3,471		3,711		(1,168		)	1994		(a)
Autumn Ridge	Ankeny, IA	A	890	8,054		(33	)	1,842	857		9,896		10,754		(3,081		)	1996		(a)
Bedford Hills	Battle Creek, MI	—	1,265	11,562		—		1,867	1,265		13,429		14,694		(4,435		)	1996		(a)
Bell Crossing	Clarksville, TN	—	717	1,916		—		5,892	717		7,808		8,525		(1,558		)	1999		(a)
Boulder Ridge	Pflugerville, TX	A	1,000	500		3,324		21,534	4,324		22,034		26,358		(4,815		)	1998		(c)
Branch Creek	Austin, TX	A	796	3,716		—		6,309	796		10,025		10,821		(3,109		)	1995		(a)
Brentwood	Kentwood, MI	B	385	3,592		—		1,154	385		4,746		5,131		(1,501		)	1996		(a)
Brookside Village	Goshen, IN	A	260	1,080		386		10,023	646		11,103		11,749		(3,475		)	1985		(a)
Buttonwood Bay	Sebring, FL	B	1,952	18,294		—		3,178	1,952		21,472		23,424		(3,913		)	2001		(a)
Byrne Hill Village	Toledo, OH	B	383	3,903		—		1,020	383		4,923		5,305		(1,171		)	1999		(a)
Byron Center	Byron Center, MI	B	253	2,402		—		713	253		3,115		3,368		(979		)	1996		(a)
Candlelight Village	Chicago Heights, IL	B	600	5,623		—		3,272	600		8,895		9,495		(2,610		)	1996		(a)
Candlewick Court	Owosso, MI	B	125	1,900		132		2,129	257		4,029		4,286		(1,417		)	1985		(a)
Carrington Pointe	Ft. Wayne, IN	A	1,076	3,632		—		6,038	1,076		9,670		10,746		(2,526		)	1997		(a)
Casa Del Valle	Alamo, TX	B	246	2,316		—		674	246		2,990		3,236		(961		)	1997		(a)
Catalina	Middletown, OH	B	653	5,858		—		3,899	653		9,757		10,410		(3,510		)	1993		(a)
Cave Creek	Evans, CO	5,838	2,241	15,343		—		5,693	2,241		21,036		23,277		(1,985		)	2004		(a)
Chisholm Point	Pflugerville, TX	A	609	5,286		—		5,808	609		11,094		11,703		(3,173		)	1995		(a)
Clearwater Village	South Bend, IN	A	80	1,270		61		3,460	141		4,730		4,871		(1,489		)	1986		(a)
Cobus Green	Elkhart, IN	—	762	7,037		—		2,835	762		9,872		10,634		(3,789		)	1993		(a)
College Park Estates	Canton, MI	—	75	800		174		6,290	249		7,090		7,339		(2,420		)	1978		(a)
Comal Farms	New Braunfels, TX	—	1,455	1,732		—		6,741	1,455		8,473		9,927		(1,331		)	2000		(a&c)
Continental Estates	Davison, MI	B	1,625	16,581		150		1,847	1,775		18,428		20,203		(5,794		)	1996		(a)
Continental North (1)	Davison, MI	B	—			—		8,648	—		8,648		8,648		(2,453		)	1996		(a)
Corporate Headquarters	Farmington Hills, MI	—	—	—		442		8,918	442		8,918		9,359		(3,990		)	Various
Country Acres	Cadillac, MI	B	380	3,495		—		1,647	380		5,142		5,522		(1,538		)	1996		(a)
Country Meadows	Flat Rock, MI	A	924	7,583		296		13,707	1,220		21,290		22,510		(6,674		)	1994		(a)
Countryside Atlanta	Lawrenceville, GA	12,950	1,274	10,957		—		1,179	1,274		12,136		13,411		(1,075		)	2004		(a)
Countryside Gwinnett	Buford, GA	—	1,124	9,539		—		1,630	1,124		11,169		12,293		(988		)	2004		(a)
Countryside Lake Lanier	Buford, GA	16,850	1,916	16,357		—		2,709	1,916		19,066		20,983		(1,637		)	2004		(a)
Countryside Village	Perry, MI	—	275	3,920		185		3,315	460		7,235		7,695		(2,640		)	1987		(a)
Creekside	Reidsville, NC	—	350	1,423		—		2,893	350		4,316		4,666		(794		)	2000		(a&c)
Creekwood Meadows	Burton, MI	B	808	2,043		404		10,298	1,212		12,341		13,553		(3,030		)	1997		(c)
Cutler Estates	Grand Rapids, MI	—	749	6,941		—		1,200	749		8,141		8,890		(2,666		)	1996		(a)
Davison East (1)	Davison, MI	B	—			—		1,189	—		1,189		1,189		(203		)	1996		(a)
Deerfield Run	Anderson, IN	1,700	990	1,607		—		4,612	990		6,219		7,209		(1,275		)	1999		(a)
Desert View Village	West Wendover, NV	—	1,119	—		—		1,722	1,119		1,722		2,841		(809		)	1998		(c)
Eagle Crest	Firestone, CO	A	2,015	150		—		28,900	2,015		29,050		31,065		(4,262		)	1998		(c)
East Fork	Batavia, OH	—	1,280	6,302		—		6,627	1,280		12,929		14,209		(2,202		)	2000		(a&c)
Edwardsville	Edwardsville, KS	—	425	8,805		541		4,481	966		13,286		14,252		(4,966		)	1987		(a)
Falcon Pointe	East Lansing, MI	2,288	450	4,049		—		906	450		4,955		5,405		(548		)	2003		(a)
Fisherman’s Cove	Flint, MI	B	380	3,438		—		1,888	380		5,326		5,706		(1,919		)	1993		(a)
Forest Meadows	Philomath, OR	B	1,031	2,050		—		933	1,031		2,983		4,014		(625		)	1999		(a)
Four Seasons	Elkhart, IN	B	500	4,811		—		1,266	500		6,077		6,577		(1,295		)	2000		(a)
Glen Laurel	Concord, NC	—	1,641	453		—		8,066	1,641		8,519		10,160		(1,209		)	2001		(a&c)