Real Estate Acquisitions | Real Estate Acquisitions and Dispositions 2020 Acquisitions During the nine months ended September 30, 2020, we have acquired the following communities: Community Name Type Sites Development Sites State Month Acquired Cape Cod (1) RV 230 — MA January Jellystone Natural Bridge RV 299 — VA February Forest Springs (2) MH 372 — CA May Crown Villa RV 123 — OR June Flamingo Lake RV 421 — FL July Woodsmoke RV 300 — FL September Jellystone Lone Star RV 344 — TX September El Capitan & Ocean Mesa (3)(4) RV 266 109 CA September Highland Green Estates & Troy Villa (4) MH 1,162 — MI September Total 3,517 109 (1) In conjunction with the acquisition, we issued Series E preferred OP units. As of September 30, 2020, 90,000 Series E preferred OP units were outstanding. (2) In conjunction with the acquisition, we issued Series F preferred OP units and common OP units. As of September 30, 2020, 90,000 Series F preferred OP units and 82,420 common OP units, specific to this acquisition, were outstanding. (3) In conjunction with the acquisition, we issued Series G preferred OP units. As of September 30, 2020, 260,710 Series G preferred OP units were outstanding. (4) Contains two communities. The following table summarizes the amounts of assets acquired net of liabilities assumed at the acquisition date and the consideration paid for the acquisitions completed for the nine months ended September 30, 2020 (in thousands): At Acquisition Date Consideration Investment in property Inventory of manufactured homes In-place leases and other intangible assets Other assets / (liabilities), net Total identifiable assets acquired net of liabilities assumed Cash and escrow Temporary and permanent equity Total consideration Cape Cod $ 13,350 $ — $ 150 $ (295) $ 13,205 $ 4,205 $ 9,000 $ 13,205 Jellystone Natural Bridge 11,364 — 80 (391) 11,053 11,053 — 11,053 Forest Springs 51,949 1,337 2,160 (107) 55,339 36,260 19,079 55,339 Crown Villa 16,792 — — (230) 16,562 16,562 — 16,562 Flamingo Lake 34,000 — — (155) 33,845 33,845 — 33,845 Woodsmoke 26,000 — — (461) 25,539 25,539 — 25,539 Jellystone Lone Star 21,000 — — (703) 20,297 20,297 — 20,297 El Capitan & Ocean Mesa 59,500 — — (1,321) 58,179 32,108 26,071 58,179 Highland Green Estates & Troy Villa 63,134 1,501 — 47 64,682 64,682 — 64,682 Total $ 297,089 $ 2,838 $ 2,390 $ (3,616) $ 298,701 $ 244,551 $ 54,150 $ 298,701 As of September 30, 2020, we have incurred $4.5 million of additional capitalized transaction costs which have been allocated among the various categories above. The total amount of revenues and net income included in the Consolidated Statements of Operations for the three and nine months ended September 30, 2020 related to the acquisitions completed in 2020 are set forth in the following table (in thousands): Three Months Ended Nine Months Ended September 30, 2020 September 30, 2020 Total revenues $ 5,714 $ 7,055 Net income $ 2,186 $ 2,400 The following unaudited pro forma financial information presents the results of our operations for the three and nine months ended September 30, 2020 and 2019, as if the properties acquired in 2020 had been acquired on January 1, 2019. The unaudited pro forma results reflect certain adjustments for items that are not expected to have a continuing impact, such as adjustments for transaction costs incurred, management fees and purchase accounting. The information presented below has been prepared for comparative purposes only and does not purport to be indicative of either future results of operations or the results of operations that would have actually occurred had the acquisition been consummated on January 1, 2019 (in thousands, except per-share data): Three Months Ended Nine Months Ended September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Total revenues $ 422,130 $ 393,218 $ 1,035,698 $ 992,993 Net income attributable to Sun Communities, Inc. common stockholders $ 85,822 $ 65,087 $ 128,646 $ 139,803 Net income per share attributable to Sun Communities, Inc. common stockholders - basic $ 0.90 $ 0.74 $ 1.35 $ 1.60 Net income per share attributable to Sun Communities, Inc. common stockholders - diluted $ 0.89 $ 0.74 $ 1.34 $ 1.59 On September 29, 2020, we, along with our wholly-owned subsidiary, Sun SH LLC (“Merger Sub”), entered into a merger agreement (the “Merger Agreement”) with Safe Harbor Marinas, LLC (“Safe Harbor”) and certain other parties. The Merger Agreement contemplates that we will acquire Safe Harbor and its properties (the “Safe Harbor Properties”) through a merger of Merger Sub into Safe Harbor, with Safe Harbor being the surviving entity of the merger (the “Merger”). Subject to certain adjustments, including a net working capital adjustment, the aggregate consideration for the Merger is approximately $2.1 billion. The purchase price will be paid through a combination of the assumption of debt owed by Safe Harbor, the issuance of common and preferred OP units by the Operating Partnership, and cash. Third-party consents are required for us to acquire, through our indirect ownership of Safe Harbor, certain of the Safe Harbor Properties as a result of the Merger. With respect to four of these properties, which have an aggregate value of $112.6 million as mutually agreed by the parties in the Merger Agreement, if any of these consents are not received by the closing of the Merger, the affected properties (the “Delayed Consent Properties”) will be retained by an affiliate of the owners of Safe Harbor. The cash consideration we will pay at the closing of the Merger will be reduced by the agreed value of the Delayed Consent Properties. If and when a required third-party consent for a Delayed Consent Property is obtained in the two-year period following the closing of the Merger, we will acquire, through our indirect ownership of Safe Harbor, that Delayed Consent Property for cash consideration equal to its agreed value. If the required third-party consent for a Delayed Consent Property is not received by the end of such two-year period, we will not have the right to acquire the Delayed Consent Property. With respect to 11 of these Safe Harbor Properties, which have an aggregate value of $260.2 million as mutually agreed by the parties in the Merger Agreement, if any of such third-party consents are not received by the closing of the Merger, the affected properties (the “Delayed Closing Properties”), at our election, may be retained by an affiliate of the owners of Safe Harbor until not later than November 30, 2020. The cash consideration we will pay at the closing of the Merger will be reduced by the agreed value of the Delayed Closing Properties. Even if required third-party consents for the Delayed Closing Properties are not obtained before November 30, 2020, we are obligated on that date to acquire, through our indirect ownership of Safe Harbor, all of the Delayed Closing Properties for cash consideration equal to their agreed values. We anticipate that the closing of the Merger will occur no later than October 30, 2020. The consummation of the Merger is subject to customary closing conditions. If these conditions are not satisfied or waived, or if the merger agreement is otherwise terminated in accordance with its terms, then the acquisition will not be consummated. As a result, there can be no assurances as to the actual closing, or the timing of the closing of the Merger. Disposition On July 1, 2020, we sold a manufactured home community located in Montana, containing 226 sites, for $12.6 million. The gain from the sale of the property was approximately $5.6 million. 2019 Acquisitions For the year ended December 31, 2019 we acquired the following communities: Community Name Type Sites Development Sites State Month Acquired Slickrock Campground RV 193 — UT December Pandion Ridge RV 142 351 AL November Jensen Portfolio (1) MH 5,230 466 Various October Glen Ellis RV 244 40 NH September Leisure Point Resort (2) MH / RV 502 — DE September Reunion Lake RV 202 69 LA July River Plantation RV 309 — TN May Massey’s Landing RV RV 291 — DE February Shelby Properties (3) MH 1,308 — MI February Buena Vista MH 400 — AZ February Country Village Estates (4) MH 518 — OR January Hid’n Pines RV RV 321 — ME January Hacienda del Rio MH (Age-Restricted) 730 — FL January Total 10,390 926 (1) Contains 31 communities located in CT, GA, MD, NH, NJ, NY, NC and SC. In conjunction with the acquisition, we issued 1,972,876 shares of common stock, net of fractional shares paid in cash. (2) Contains 201 MH sites and 301 RV sites. (3) Contains two MH communities. (4) In conjunction with the acquisition, we issued Series D preferred OP units. As of December 31, 2019, 488,958 Series D preferred OP units were outstanding. The following table summarizes the amounts of assets acquired net of liabilities assumed at the acquisition date and the consideration paid for the acquisitions completed in 2019 (in thousands): At Acquisition Date Consideration Investment in property Inventory of manufactured homes In-place leases and other intangible assets Other assets / (liabilities), net Total identifiable assets acquired net of liabilities assumed Cash and escrow Debt assumed Temporary and permanent equity Total consideration Slickrock Campground $ 8,250 $ — $ — $ 8 $ 8,258 $ 8,258 $ — $ — $ 8,258 Pandion Ridge 19,070 — — (92) 18,978 18,978 — — 18,978 Jensen Portfolio 374,402 3,605 7,752 3,938 389,697 18,306 58,000 313,391 389,697 Glen Ellis 5,955 — — (79) 5,876 1,976 3,900 — 5,876 Leisure Point Resort 43,632 18 850 (678) 43,822 43,822 — — 43,822 Reunion Lake 23,493 — — (1,153) 22,340 22,340 — — 22,340 River Plantation 22,589 75 — — 22,664 22,664 — — 22,664 Massey's Landing 36,250 — 220 (446) 36,024 36,024 — — 36,024 Shelby Properties 85,969 2,011 6,520 (1,015) 93,485 93,485 — — 93,485 Buena Vista 20,221 439 1,590 (93) 22,157 22,157 — — 22,157 Country Village 62,784 — 2,020 31 64,835 12,905 — 51,930 64,835 Hid'n Pines 10,680 — 70 (233) 10,517 10,517 — — 10,517 Hacienda del Rio 111,971 15 3,280 (237) 115,029 115,029 — — 115,029 Total $ 825,266 $ 6,163 $ 22,302 $ (49) $ 853,682 $ 426,461 $ 61,900 $ 365,321 $ 853,682 Land for Expansion / Development During the year ended December 31, 2019, we acquired four land parcels which are located in New Braunfels, Texas; Petoskey, Michigan; Uhland, Texas and Hudson, Florida for total consideration of $7.7 million. Two of the land parcels are adjacent to existing communities. Ground Leases In August 2019, we acquired Chincoteague Island KOA RV Resort (“Chincoteague”), in Chincoteague Island, Virginia for total consideration of $19.5 million. The sellers of Chincoteague continue to operate the property. Refer to Note 16, “Leases,” for disclosures on accounting treatment. In April 2019, we acquired Strafford / Lake Winnipesaukee South KOA RV Resort ("Strafford") in Strafford, New Hampshire for total consideration of $2.7 million. The sellers of Strafford continue to operate the property. Refer to Note 16, “Leases,” for disclosures on accounting treatment. In March 2019, we entered into a four-year Temporary Occupancy and Use Permit with the Port of San Diego to operate a RV resort located in Chula Vista, CA until such time as we construct a new RV resort in the area. Concurrent with the transaction, we purchased tangible personal property from the prior owner of the RV resort for $0.3 million. Subsequently, in September 2019, we entered into a 66-year Temporary Occupancy and Use Permit, to construct and operate a new RV resort in Chula Vista. Refer to Note 16, “Leases,” for disclosures on accounting treatment. |