UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K
                                   (Mark One)

    [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

                                       OR

    [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

                           Commission File No. 1-12616

                              SUN COMMUNITIES, INC.
             (Exact name of registrant as specified in its charter)

STATE OF MARYLAND                                                     38-2730780
State of Incorporation                                  I.R.S. Employer I.D. No.
                               27777 FRANKLIN ROAD
                                    SUITE 200
                           SOUTHFIELD, MICHIGAN 48034
                                 (248) 208-2500
          (Address of principal executive offices and telephone number)

           Securities Registered Pursuant to Section 12(b) of the Act:
                     COMMON STOCK, PAR VALUE $.01 PER SHARE

           Securities Registered Pursuant to Section 12(g) of the Act:
                                      NONE
         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
[   ]
         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                    Yes X   No
                                       ---     ---

         Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act).

                                    Yes X   No
                                       ---     ---

       As of June 30, 2004, the aggregate market value of the Registrant's stock
    held by non-affiliates was approximately $615,000,000 (computed by
reference to the closing sales price of the Registrant's common stock as of June
30, 2004). For this computation, the Registrant has excluded the market value of
all shares of common stock reported as beneficially owned by executive officers
     and directors of the Registrant; such exclusion shall not be deemed to
constitute an admission that any such person is an affiliate of the Registrant.

         As of March 1, 2005, there were 18,422,518 shares of the Registrant's
common stock issued and outstanding.

                      DOCUMENTS INCORPORATED BY REFERENCE:

         Portions of the Registrant's definitive Proxy Statement to be filed for
its 2005 Annual Meeting of Shareholders are incorporated by reference into Part
III of this Report.




         As used in this report, "Company", "Us", "We", "Our" and similar terms
means Sun Communities, Inc., a Maryland corporation, and one or more of its
subsidiaries (including the Operating Partnership (as defined below)).

                                     PART I
ITEM 1.  BUSINESS

GENERAL

         We are a self-administered and self-managed real estate investment
trust, or REIT. We own, operate, develop and finance manufactured housing
communities concentrated in the midwestern and southeastern United States. We
are a fully integrated real estate company which, together with our affiliates
and predecessors, have been in the business of acquiring, operating and
expanding manufactured housing communities since 1975. As of December 31, 2004,
we owned and operated a portfolio of 136 properties located in eighteen states
(the "Properties"), including 124 manufactured housing communities, five
recreational vehicle communities, and seven properties containing both
manufactured housing and recreational vehicle sites. As of December 31, 2004,
the Properties contained an aggregate of 46,856 developed sites comprised of
41,875 developed manufactured home sites and 4,981 recreational vehicle sites
and an additional 7,277 manufactured home sites suitable for development. In
order to enhance property performance and cash flow, the Company, through Sun
Home Services, Inc., a Michigan corporation ("SHS"), actively markets, sells and
leases new and pre-owned manufactured homes for placement in the Properties.

         Our executive and principal property management office is located at
27777 Franklin Road, Suite 200, Southfield, Michigan 48034 and our telephone
number is (248) 208-2500. We have regional property management offices located
in Austin, Texas; Dayton, Ohio; Grand Rapids, Michigan; Elkhart, Indiana; and
Orlando, Florida, and we employed an aggregate of 642 people as of December 31,
2004.

         Our website address is www.suncommunities.com and we make available,
free of charge, on or through our website all of our periodic reports, including
our annual report on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K, as soon as reasonably practicable after we file such
reports with the Securities and Exchange Commission.

RECENT DEVELOPMENTS

         Recapitalization. The most significant financial event of 2004 was the
restructuring of the Company's capital and operating debt. The Company completed
$734 million of secured debt financings with an average term approximating 10
years and a weighted average interest rate of approximately 5%. The Company also
secured a new $115 million revolving line of credit at LIBOR + 1.75%. The
Company used approximately $440 million of proceeds from the secured debt
financings to retire existing debt. The Company also incurred extinguishment
costs of approximately $57 million in these transactions. Of the remaining $237
million, the Company used $100 million to acquire communities and $37 million
for repurchases of the Company's stock. The Company expects to use the remaining
proceeds to finance some combination of additional property purchases,
additional stock repurchases, and the retirement of Series A Perpetual Preferred
Operating Partnership Units ("PPOP Units").


                                       2


         Acquisitions. During 2004 the Company acquired nine manufactured
housing communities comprising approximately 2950 developed and 570 undeveloped
sites. The aggregate purchase price was $120.4 million and included the
assumption of approximately $34.3 million in debt. Three of the communities are
in northeast Atlanta, four are located in Michigan and the remaining properties
are located in Colorado and Texas.

STRUCTURE OF THE COMPANY

         Structured as an umbrella partnership REIT, or UPREIT, Sun Communities
Operating Limited Partnership, a Michigan limited partnership (the "Operating
Partnership"), is the entity through which we conduct substantially all of our
operations, and which owns, either directly or indirectly through subsidiaries,
all of our assets (the subsidiaries, collectively with the Operating
Partnership, the "Subsidiaries"). This UPREIT structure enables us to comply
with certain complex requirements under the Federal tax rules and regulations
applicable to REITs, and to acquire manufactured housing communities in
transactions that defer some or all of the sellers' tax consequences. We are the
sole general partner of, and, as of December 31, 2004, held approximately 88.2%
of the interests (not including preferred limited partnership interests) in, the
Operating Partnership. The Subsidiaries also include SHS, which provides
manufactured home sales and other services to current and prospective tenants of
the Properties.

THE MANUFACTURED HOUSING COMMUNITY INDUSTRY

         A manufactured housing community is a residential subdivision designed
and improved with sites for the placement of manufactured homes and related
improvements and amenities. Manufactured homes are detached, single-family homes
which are produced off-site by manufacturers and installed on sites within the
community. Manufactured homes are available in a wide array of designs,
providing owners with a level of customization generally unavailable in other
forms of multifamily housing.

         Modern manufactured housing communities, such as the Properties,
contain improvements similar to other garden-style residential developments,
including centralized entrances, paved streets, curbs and gutters, and parkways.
In addition, these communities also often provide a number of amenities, such as
a clubhouse, a swimming pool, shuffleboard courts, tennis courts, laundry
facilities and cable television service.

         The owner of each home on our Properties leases the site on which the
home is located. We own the underlying land, utility connections, streets,
lighting, driveways, common area amenities and other capital improvements and
are responsible for enforcement of community guidelines and maintenance. Some of
the Properties provide water and sewer service through public or private
utilities, while others provide these services to residents from on-site
facilities. Each owner within our Properties is responsible for the maintenance
of the home and leased site. As a result, capital expenditure needs tend to be
less significant, relative to multi-family rental apartment complexes.

PROPERTY MANAGEMENT

         Our property management strategy emphasizes intensive, hands-on
management by dedicated, on-site district and community managers. We believe
that this on-site focus enables us to continually monitor and address tenant
concerns, the performance of competitive properties

                                       3


and local market conditions. Of the 642 Company employees, 545 are located
on-site as property managers, support staff, or maintenance personnel.

         Our community managers are overseen by Brian W. Fannon, Chief Operating
Officer, who has 35 years of property management experience, three Senior Vice
Presidents of Operations and seventeen Regional Vice Presidents. In addition,
the Regional Vice Presidents are responsible for semi-annual market surveys of
competitive communities, interaction with local manufactured home dealers and
regular property inspections.

         Each district or community manager performs regular inspections in
order to continually monitor the Property's physical condition and provides
managers with the opportunity to understand and effectively address tenant
concerns. In addition to a district or community manager, each district or
property has an on-site maintenance personnel and management support staff. We
hold periodic training sessions for all property management personnel to ensure
that management policies are implemented effectively and professionally.

HOME SALES AND LEASING

         SHS offers manufactured home sales services to tenants and prospective
tenants of our Properties. Since tenants often purchase a home already on-site
within a community, such services enhance occupancy and property performance.
Additionally, because many of the homes on the Properties are sold through SHS,
better control of home quality in our communities can be maintained than if
sales services were conducted solely through third-party brokers. SHS also
leases homes to prospective tenants.

REGULATIONS AND INSURANCE

         General. Manufactured housing community properties are subject to
various laws, ordinances and regulations, including regulations relating to
recreational facilities such as swimming pools, clubhouses and other common
areas. We believe that each Property has the necessary operating permits and
approvals.

         Insurance. Our management believes that the Properties are covered by
adequate fire, flood, property and business interruption insurance provided by
reputable companies with commercially reasonable deductibles and limits. We
maintain a blanket policy that covers all of our Properties. We have obtained
title insurance insuring fee title to the Properties in an aggregate amount
which we believe to be adequate.

CORPORATE GOVERNANCE

         We have implemented the following corporate governance initiatives to
address certain legal requirements promulgated under the Sarbanes-Oxley Act of
2002, as well as the recently adopted New York Stock Exchange corporate
governance listing standards:

         o        Our Board of Directors determined that Paul D. Lapides, the
                  Chairman of the Audit Committee, qualifies as an "audit
                  committee financial expert" as such term is defined under Item
                  401 of Regulation S-K. Mr. Lapides is "independent" as that
                  term is used in Item 7(d)(3)(iv) of Schedule 14A under the
                  Exchange Act.



                                       4


         o        Our Audit Committee adopted our Audit 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.

         o        Our Board of Directors adopted a Financial Code of Ethics for
                  Senior Financial Officers, which governs the conduct of our
                  senior financial officers. 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 to any
                  stockholder upon written request addressed to Investor
                  Relations, Sun Communities, Inc., 27777 Franklin Road, Suite
                  200, Southfield, Michigan 48034.

         o        Our Board 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.

         o        Our Board of Directors adopted a Code of Business Conduct and
                  Ethics, which governs business decisions made and actions
                  taken 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 to any stockholder upon written request
                  addressed to Investor Relations, Sun Communities, Inc., 27777
                  Franklin Road, Suite 200, Southfield, Michigan 48034.

         o        Our Board of Directors adopted Corporate Governance
                  Guidelines, a copy of which 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.

FACTORS THAT MAY AFFECT FUTURE RESULTS

         Our prospects are subject 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, 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.

                                       5


                                REAL ESTATE RISKS

General economic conditions and the concentration of our properties in Michigan,
Florida, and Indiana may affect our ability to generate sufficient revenue.

         The market and economic conditions in our current markets generally,
and specifically in metropolitan areas 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 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 income for the period ended December 31, 2004 from properties located
in Michigan, Florida, and Indiana. As of December 31, 2004, 46 of our 136
Properties, or approximately 30% of developed sites, are located in Michigan, 20
Properties, or approximately 21% of developed sites, are located in Florida, and
18 Properties, or approximately 14% of developed sites, are located in Indiana.
As a result of the geographic concentration of our Properties in Michigan,
Florida, and Indiana, we are exposed to the risks of downturns in the local
economy or other local real estate market conditions which could adversely
affect occupancy rates, rental rates and property values of properties in these
markets.

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

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

         o        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;

         o        the number of repossessed homes in a particular market;

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

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

         o        zoning or other regulatory restrictions;

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

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

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

         o        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


                                       6



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 on 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 manufactured homes may be affected by various factors, which
may in turn adversely affect our profitability.

         SHS is in the manufactured home sales market offering manufactured home
sales services to tenants and prospective tenants of our communities. The market
for the sale of manufactured homes may be adversely affected by the following
factors:

         o        downturns in economic conditions which adversely impact the
                  housing market;

         o        an oversupply of, or a reduced demand for, manufactured homes;

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

         o        an increase 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, 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 tax laws generally may be
passed through to tenants and will not affect us. Increases in income, service
or other taxes, however, 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.



                                       7


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

         We are engaged in the construction and development of new communities,
and intend to continue 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 associated with the
ownership and operation of established manufactured housing communities:

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

         o        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;

         o        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;

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

         o        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;

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

         o        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:

         o        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;


                                       8

         o        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;

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

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

         o        acquired properties may fail to perform as expected;

         o        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

         o        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.

         In addition, we may acquire properties subject to liabilities 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 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 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



                                       9


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 decided to carry a large 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.










                                       10


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, 2004, we had
approximately $1.08 billion of total debt outstanding, consisting of
approximately $1.01 billion in collateralized debt that is collateralized by
mortgage liens on 110 of the Properties and new home inventory (the "Mortgage
Debt"), and approximately $67.1 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:

         o        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;

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

         o        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;

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

         o        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.





                                       11


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, 2004) 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.


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, 2004, we had an investment of approximately $18.5
million in real estate loans to several entities and Properties, some of which
are secured by a first lien on the underlying property, and others which are
secured loans subordinate to the primary lender. Also, as of December 31, 2004,
we had outstanding approximately $16.4 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:

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

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

         o        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.






                                       12


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 have
been organized and operated, and intend to continue to operate, so as to qualify
for taxation as a REIT under the Internal Revenue Code ("Code"). Although we
believe that we have been and will continue to be organized and have operated
and will continue to operate so as to qualify for taxation as 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 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 be
subject to federal income 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 for 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 for and
maintain our REIT status, we will be subject to certain federal, state and local
taxes on our property and certain of our operations.

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

         We believe that the Operating Partnership has been organized as a
partnership and will qualify for treatment as such under the Code. However, if
the Operating Partnership is deemed to be a "publicly traded partnership," it
will be treated as a corporation instead of a partnership for 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 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 for
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 result 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 in subsequent
periods to fund our operations and future growth.


                                       13


BUSINESS RISKS

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., the Company purchased 5,000,000 shares of Origen common stock for $50
million and Shiffman Origen LLC (which is owned by the Estate of Milton M.
Shiffman, 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 a member of the board of directors of Origen
and Arthur A. Weiss, a director of the Company, is a personal representative of
the Estate of Milton M. Shiffman.

         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:

         o        Origen services approximately $16.0 million of manufactured
                  home loans for the Company as of December 31, 2004 for an
                  annual servicing fee of approximately 1.25% of the outstanding
                  principal balance of the loans.

         o        The Company has agreed to provide Origen (along with certain
                  other major lenders) certain concessions on manufactured homes
                  that Origen repossesses in its communities. These concessions
                  may include rent abatement for the first 12 months that a
                  repossessed home is held for sale and abatement of the
                  commission that the Company would earn if it brokers such
                  sale.

         o        Certain loans under the Company's Home Buying Made Easy
                  program are originated and serviced by Origen. Loans under
                  this program may, from time to time, be sold to Origen.
                  Because these loans are made below published rates, if the
                  Company sells any of these loans to Origen, the Company will
                  pay Origen the interest differential between market rates and
                  the rates paid by the borrowers for any such loans.

         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% equity interest in American
Center LLC, the entity from which we lease office space for our principal
executive offices. This lease is for an initial term of five years and we have
the right to extend the lease for an additional five year term. The annual base
rent under this lease begins at $19.25 per square foot (gross) for the first
lease year and increases $0.50 per square foot for each successive year of the
initial term. Mr. Shiffman


                                       14


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.

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"). 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 Estate
of Milton M. Shiffman 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.


                                       15


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, 2004, up to 3,200,000 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 $44 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 $1,200,000. In
addition, as of December 31, 2004, options to purchase 696,380 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.










                                       16


ITEM 2.  PROPERTIES

         General. As of December 31, 2004, the Properties consisted of 124
manufactured housing communities, five recreational vehicle communities, and
seven 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, 2004, the Properties contained 46,856
developed sites comprised of 41,875 developed manufactured home sites and 4,981
recreational vehicle sites and an additional 7,277 manufactured home sites
suitable for development. Most of the Properties include amenities oriented
towards family and retirement living. Of the 136 Properties, 67 have more than
300 developed manufactured home sites, with the largest having 913 developed
manufactured home sites.

         As of December 31, 2004, the Properties had an occupancy rate of 87
percent in stabilized communities and 58 percent in development communities and
the aggregate occupancy rate was 84 percent excluding recreational vehicle
sites. Since January 1, 2004, 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
home is sold and remains within the community, typically without interruption of
rental income) of approximately 8.0 percent.

         We believe that our Properties' high amenity levels contribute to low
turnover and generally high occupancy rates. All of the Properties provide
residents with attractive amenities with most offering a clubhouse, a swimming
pool, laundry facilities and cable television service. Many Properties offer
additional amenities such as sauna/whirlpool spas, tennis, shuffleboard and
basketball courts and/or exercise rooms.

         We have tried to concentrate our communities within certain geographic
areas in order to achieve economies of scale in management and operation. The
Properties are principally concentrated in the midwestern and southeastern
United States. We believe that geographic diversification will help insulate the
portfolio from regional economic influences.

         The following table sets forth certain information relating to the
properties owned as of December 31, 2004:



                                                       DEVELOPED    OCCUPANCY    OCCUPANCY    OCCUPANCY
                                                      SITES AS OF     AS OF        AS OF        AS OF
                PROPERTY AND LOCATION                  12/31/2004  12/31/02(1)  12/31/03(1)  12/31/04(1)
                ---------------------                  ----------  -----------  -----------  -----------
                                                                                  
MIDWEST
MICHIGAN
Academy/West Pointe                                       441          98%          96%          95%
  Canton, MI
Allendale Meadows Mobile Village                          352          93%          88%          85%
  Allendale, MI
Alpine Meadows Mobile Village                             403          96%          94%          91%
  Grand Rapids, MI
Bedford Hills Mobile Village                              339          95%          91%          86%
  Battle Creek, MI
Brentwood Mobile Village                                  195          96%          94%          94%
  Kentwood, MI





                                       17




                                                       DEVELOPED    OCCUPANCY    OCCUPANCY    OCCUPANCY
                                                      SITES AS OF     AS OF        AS OF        AS OF
                PROPERTY AND LOCATION                  12/31/2004  12/31/02(1)  12/31/03(1)  12/31/04(1)
                ---------------------                  ----------  -----------  -----------  -----------

                                                                                  
Byron Center Mobile Village                               143          98%          95%          97%
  Byron Center, MI
Candlewick Court Manufactured Housing Community           211          97%          93%          88%
  Owosso, MI
College Park Estates Manufactured Housing Community       230          92%          85%          79%
  Canton, MI
Continental Estates Manufactured Housing Community        385          79%          70%          63%
  Davison, MI
Continental North Manufactured Housing Community          474          84%          75%          67%
  Davison, MI
Country Acres Mobile Village                              182          95%          93%          95%
  Cadillac, MI
Country Meadows Mobile Village                            577          98%          94%          94%
  Flat Rock, MI
Countryside Village Manufactured Housing Community        359          96%          91%          92%
  Perry, MI
Creekwood Meadows Mobile Home Park                        336          85%          74%          72%
  Burton, MI
Cutler Estates Mobile Village                             259          96%          90%          92%
  Grand Rapids, MI
Davison East Manufactured Housing Community               190          88%          81%          73%
  Davison, MI
Falcon Pointe (8)                                         102          (2)        26%(8)       22%(8)
  East Lansing, MI
Fisherman's Cove Manufactured Housing Community           162          94%          90%          90%
  Flint, MI
Grand Mobile Estates                                      230          95%          89%          80%
  Grand Rapids, MI
Hamlin Manufactured Housing Community (4)                 170         85%(4)      88%(4)       91%(4)
  Webberville, MI
Holly Village/Hawaiian Gardens                            425          (3)          (3)          98%
  Holly, MI
Hunters Glen (8)                                          280          (3)          (3)        44%(8)
  Wayland, MI
Kensington Meadows Mobile Home Park                       290          92%          84%          82%
  Lansing, MI
Kings Court Mobile Village                                639          98%          97%          97%
  Traverse City, MI
Knollwood Estates                                         161          94%          89%          84%
  Allendale, MI
Lafayette Place                                           254          98%          96%          92%
  Metro Detroit, MI
Lakeview                                                  392          (3)          (3)          91%
  Ypsilanti, MI
Lincoln Estates Mobile Home Park                          191          95%          95%          95%
  Holland, MI
Meadow Lake Estates Manufactured Housing Community        425          97%          93%          92%
  White Lake, MI
Meadowbrook Estates Manufactured Housing Community        453          97%          96%          94%
  Monroe, MI
Presidential Estates Mobile Village                       364          95%          89%          89%
  Hudsonville, MI
Richmond Place                                            117          100%        100%          97%
  Metro Detroit, MI
River Haven Village                                       721          79%          77%          70%
  Grand Haven, MI
Scio Farms Estates                                        913          99%          98%          98%
  Ann Arbor, MI
Sherman Oaks Manufactured Housing Community               366          94%          88%          88%
  Jackson, MI
St. Clair Place                                           100          99%          98%          97%
  Metro Detroit, MI
Sunset Ridge (8)                                          190         45%(8)      71%(8)       64%(8)
  Portland Township, MI







                                       18





                                                       DEVELOPED    OCCUPANCY    OCCUPANCY    OCCUPANCY
                                                      SITES AS OF     AS OF        AS OF        AS OF
                PROPERTY AND LOCATION                  12/31/2004  12/31/02(1)  12/31/03(1)  12/31/04(1)
                ---------------------                  ----------  -----------  -----------  -----------

                                                                                  
Timberline Estates Manufactured Housing Community         296          94%          90%          86%
  Grand Rapids, MI
Town & Country Mobile Village                             192          99%          99%          98%
  Traverse City, MI
Village Trails                                            100          80%          71%          78%
  Howard City,  MI
White Lake Mobile Home Village (4)                        315         96%(4)      96%(4)       95%(4)
  White Lake, MI
White Oak Estates                                         480          86%          84%          80%
  Mt. Morris, MI
Windham Hills Estates (4)                                 402         82%(4)      73%(4)       72%(4)
  Jackson, MI
Woodhaven Place                                           220          98%          98%          96%
                                                          ---          ---          ---          ---
  Metro Detroit, MI
MICHIGAN TOTAl                                           14,026        92%          88%          86%
                                                         ======        ===          ===          ===

INDIANA
Brookside Mobile Home Village                             570          88%          81%          73%
  Goshen, IN
Carrington Pointe                                         320          81%          78%          76%
  Ft. Wayne, IN
Clear Water Mobile Village                                227          86%          78%          77%
  South Bend, IN
Cobus Green Mobile Home Park                              386          81%          75%          72%
  Elkhart, IN
Deerfield Run Manufactured Home Community (4)             175         73%(4)      73%(4)       68%(4)
  Anderson, IN
Four Seasons Mobile Home Park                             218          95%          94%          94%
  Elkhart, IN
Holiday Mobile Home Village                               326          95%          93%          91%
  Elkhart, IN
Liberty Farms Communities                                 220          99%          98%          97%
  Valparaiso, IN
Maplewood Mobile Home Park                                207          97%          88%          83%
  Lawrence, IN
Meadows Mobile Home Park                                  330          85%          79%          73%
  Nappanee, IN
Pebble Creek(8) (9)                                       258         76%(8)      79%(8)       76%(8)
  Greenwood, IN
Pine Hills Mobile Home Subdivision                        129          95%          84%          80%
  Middlebury, IN
Roxbury Park                                              398          94%          94%          93%
  Goshen, IN
Timberbrook Mobile Home Park                              567          84%          75%          75%
  Bristol, IN
Valley Brook Mobile Home Park                             799          88%          85%          75%
  Indianapolis, IN
West Glen Village Mobile Home Park                        552          96%          88%          87%
  Indianapolis, IN
Woodlake Estates (4)                                      338         72%(4)      62%(4)       60%(4)
  Ft. Wayne, IN
Woods Edge Mobile Village (4)                             598         74%(4)      71%(4)       66%(4)
                                                          ---         ------      ------       ------
  West Lafayette, IN
INDIANA TOTAL                                            6,618         86%          81%          78%
                                                         =====         ===          ===          ===







                                       19





                                                       DEVELOPED    OCCUPANCY    OCCUPANCY    OCCUPANCY
                                                      SITES AS OF     AS OF        AS OF        AS OF
                PROPERTY AND LOCATION                  12/31/2004  12/31/02(1)  12/31/03(1)  12/31/04(1)
                ---------------------                  ----------  -----------  -----------  -----------
                                                                                   
OTHER
Apple Creek Manufactured Home Community and Self Storage  176          94%          93%          88%
  Cincinnati, OH
Autumn Ridge Mobile Home Park                             413          98%          98%          98%
   Ankeny, IA
Bell Crossing Manufactured Home Community (4)             239         41%(4)      33%(4)       44%(4)
  Clarksville, TN
Boulder Ridge (4)                                         527         85%(4)      69%(4)       59%(4)
  Pflugerville, TX
Branch Creek Estates                                      392          98%          95%          94%
  Austin, TX
Byrne Hill Village Manufactured Home Community            236          96%         100%          98%
  Toledo, OH
Candlelight Village Mobile Home Park                      309          95%          93%          93%
  Chicago Heights, IL
Casa del Valle (1) (7)                                  116/400        100%        100%          97%
  Alamo, TX
Catalina Mobile Home Park                                 462          83%          73%          70%
  Middletown, OH
Cave Creek                                                289          (3)          (3)          63%
  Evans, CO
Chisholm Point Estates                                    416          94%          89%          86%
  Pflugerville, TX
Comal Farms (8) (9)                                       349         43%(8)      48%(8)       48%(8)
  New Braunfels, TX
Countryside Atlanta                                       271          (3)          (3)          94%
  Lawrenceville, GA
Countryside Gwinnett                                      331          (3)          (3)          88%
  Buford, GA
Countryside Lake Lanier                                   548          (3)          (3)          80%
  Buford, GA
Creekside (8) (9)                                          46         66%(8)      72%(8)       78%(8)
  Reidsville, NC
Desert View Village (8)                                    93         40%(8)      48%(8)       52%(8)
  West Wendover, NV
Eagle Crest (8)                                           318         97%(8)      62%(8)       66%(8)
  Firestone, CO
East Fork (8) (9)                                         197         88%(8)      79%(8)       77%(8)
  Batavia, OH
Edwardsville Mobile Home Park                             634          92%          84%          79%
  Edwardsville, KS
Forest Meadows                                             76          92%          91%          83%
  Philomath, OR
Glen Laurel (8) (9)                                       261         18%(8)      25%(8)       26%(8)
  Concord, NC
High Pointe                                               411          95%          93%          90%
  Frederica, DE
Kenwood RV and Mobile Home Plaza (1) (7)                 36/289        100%        100%         100%
  LaFeria, TX
Meadowbrook (8) (9)                                       177         80%(8)      76%(8)       74%(8)
  Charlotte, NC
North Point Estates (8)                                   108         50%(8)      35%(8)       34%(8)
   Pueblo, CO
Oak Crest (8)                                             335         84%(8)      63%(8)       51%(8)
   Austin, TX
Oakwood Village (4)                                       511         74%(4)      77%(4)       78%(4)
  Dayton, OH
Orchard Lake Manufactured Home Community                  147          97%          97%          97%
  Cincinnati, OH
Pecan Branch (8)                                           69         74%(8)      83%(8)       61%(8)
  Williamson County, TX




                                       20




                                                       DEVELOPED    OCCUPANCY    OCCUPANCY    OCCUPANCY
                                                      SITES AS OF     AS OF        AS OF        AS OF
                PROPERTY AND LOCATION                  12/31/2004  12/31/02(1)  12/31/03(1)  12/31/04(1)
                ---------------------                  ----------  -----------  -----------  -----------
                                                                                 
Pheasant Ridge                                            553          99%         100%         100%
   Manor Township, PA
Pin Oak Parc Mobile Home Park                             502          97%          95%          94%
  O'Fallon, MO
Pine Ridge Mobile Home Park                               245          95%          94%          91%
  Petersburg, VA
Pine Trace                                                420          (3)          (3)          71%
  Houston, TX
River Ranch (8) (9)                                       121          (8)        15%(8)       27%(8)
   Austin, TX
River Ridge (8)                                           337         89%(8)      85%(8)       77%(8)
   Austin, TX
Saddle Brook (8)                                          258         39%(8)      40%(8)       37%(8)
   Austin, TX
Sea Air (1) (7)                                         370/527        100%         99%          97%
  Rehoboth Beach, DE
Snow to Sun (1) (7)                                     179/489        99%         100%         100%
  Weslaco, TX
Southfork Mobile Home Park                                477          90%          84%          76%
  Belton, MO
Stonebridge (8) (9)                                       340         83%(8)      59%(8)       61%(8)
  San Antonio, TX
Summit Ridge (8) (9)                                      252         91%(8)      56%(8)       65%(8)
  Converse, TX
Sunset Ridge (8) (9)                                      172         71%(8)      69%(8)       73%(8)
  Kyle TX
Sun Villa Estates                                         324          99%          99%          99%
  Reno, NV
Timber Ridge Mobile Home Park                             585          98%          97%          94%
  Ft. Collins, CO
Westbrook Village (6)                                     344          97%          93%          92%
  Toledo, OH
Westbrook Senior Village                                  112          99%          99%         100%
  Toledo, OH
Willowbrook Place                                         266          98%          96%          96%
  Toledo, OH
Woodlake Trails (8) (9)                                   134         44%(8)      79%(8)       87%(8)
  San Antonio, TX
Woodland Park Estates                                     399          94%          92%          89%
  Eugene, OR
Woodside Terrace Manufactured Home Community              439          96%          95%          93%
  Holland, OH
Worthington Arms Mobile Home Park                         224          96%          96%          92%
                                                          ---          ---          ---          ---
  Delaware, OH
OTHER TOTAL                                              16,550        86%          81%          75%
                                                         ======        ===          ===          ===

SOUTHEAST
FLORIDA
Arbor Terrace RV Park                                     395          (5)          (5)          (5)
  Bradenton, FL
Ariana Village Mobile Home Park                           208          88%          88%          87%
  Lakeland, FL
Bonita Lake Resort                                        165          (5)          (5)          (5)
  Bonita Springs, FL
Buttonwood Bay (1) (7)                                  407/942        100%        100%         100%
   Sebring, FL






                                       21




                                                       DEVELOPED    OCCUPANCY    OCCUPANCY    OCCUPANCY
                                                      SITES AS OF     AS OF        AS OF        AS OF
                PROPERTY AND LOCATION                  12/31/2004  12/31/02(1)  12/31/03(1)  12/31/04(1)
                ---------------------                  ----------  -----------  -----------  -----------
                                                                                   
Gold Coaster Manufactured Home Community (1) (7)        338/545        98%         100%         100%
  Florida City, FL
Groves RV Resort                                          297          (5)          (5)          (5)
  Lee County, FL
Holly Forest Estates                                      402          100%        100%         100%
  Holly Hill, FL
Indian Creek Park (1) (7)                              353/1,500       100%        100%         100%
  Ft. Myers Beach, FL
Island Lakes Mobile Home Park                             301          100%        100%         100%
  Merritt Island, FL
Kings Lake Mobile Home Park                               245          100%        100%         100%
  Debary, FL
Lake Juliana Landings Mobile Home Park                    278          77%          81%          86%
  Auburndale, FL
Lake San Marino RV Park                                   411          (5)          (5)          (5)
  Naples, FL
Leesburg Landing                                           95          69%          73%          76%
  Lake County, FL
Meadowbrook Village Mobile Home Park                      257          99%          98%         100%
  Tampa, FL
Orange Tree Village Mobile Home Park                      246          100%        100%         100%
  Orange City, FL
Royal Country Mobile Home Park                            864          100%        100%         100%
  Miami, FL
Saddle Oak Club Mobile Home Park                          376          100%        100%         100%
  Ocala, FL
Siesta Bay RV Park                                        820          (5)          (5)          (5)
  Ft. Myers Beach, FL
Silver Star Mobile Village                                407          99%          98%          98%
  Orlando, FL
Water Oak Country Club Estates/Water Oak Mobile Home
  Park                                                    908          100%        100%         100%
  Lady Lake, FL                                           ---          ----        ----         ----
Florida Total                                            9,662         97%          98%          98%
                                                         =====         ===          ===          ===

TOTAL/AVERAGE                                            46,856        90%          86%          84%
                                                         ======        ===          ===          ===
TOTAL STABILIZED COMMUNITIES                             41,585        92%          89%          87%
                                                         ======        ===          ===          ===
TOTAL DEVELOPMENT COMMUNITIES                            5,271         65%          59%          58%
                                                         =====         ===          ===          ===


(1)      OCCUPANCY PERCENTAGE RELATES TO MANUFACTURED HOUSING SITES, EXCLUDING
         RECREATIONAL VEHICLE SITES. DATA PRESENTED MH SITES/TOTAL SITES.
(2)      ACQUIRED 2003.
(3)      ACQUIRED 2004.
(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 68.5 PERCENT EQUITY INTEREST AS
         OF DECEMBER 31, 2004.





                                       22


         Leases. The typical lease we enter into with a tenant 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
3.3 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 thirty years. See "Regulations and Insurance."


ITEM 3.  LEGAL PROCEEDINGS

            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), filed a complaint against the Company, SunChamp LLC, 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. The current
status is that the proceedings in North Carolina have been stayed pending final
determination in Michigan as to whether the dispute should be submitted to
arbitration.

            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

         Not applicable





                                       23


PART II

ITEM 5.  MARKET FOR THE COMPANY'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES

MARKET INFORMATION

         Our common stock has been listed on the New York Stock Exchange
("NYSE") since December 8, 1993 under the symbol "SUI." On March 1, 2005, the
closing sales price of the common stock was $36.09 and the common stock was held
by approximately 612 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 the
Company with respect to each such period.



                                                              High               Low          Distribution
                                                              -----              ----         ------------
                                                                                         
FISCAL YEAR ENDED DECEMBER 31, 2003
     First Quarter of 2003                                    37.92             32.87             0.58
     Second Quarter of 2003                                   40.46             35.75             0.61
     Third Quarter of 2003                                    41.00             37.56             0.61
     Fourth Quarter of 2003                                   40.65             35.78             0.61

FISCAL YEAR ENDED DECEMBER 31, 2004
     First Quarter of 2004                                    42.82             37.86             0.61
     Second Quarter of 2004                                   42.90             33.30             0.61
     Third Quarter of 2004                                    39.92             35.75             0.61
     Fourth Quarter of 2004                                   40.76             37.86             0.61



RECENT SALES OF UNREGISTERED SECURITIES

         On January 5, 2004 the Operating Partnership issued 47,250 Series B-3
Preferred Units to the members of Westbrook Co., Ltd, paid approximately $1.2
million in cash and assumed approximately $4.2 million of debt, which was
immediately retired, in exchange for property with a net agreed upon value of
$10.1 million. Holders of the Series B-3 Units may require the Company to redeem
the Series B-3 Units (a) within the ninety (90) day period following each of the
fifth, sixth, seventh, eighth, ninth and tenth anniversaries of the issuance
date, (b) in the event of the death of a holder, and (c) at any time after the
tenth anniversary. The redemption price is $100 per Series B-3 Unit. The
Operating Partnership has the right to redeem the Series B-3 Units at any time
after the tenth anniversary. On August 24, 2004, the Operating Partnership
redeemed 7,500 Series B-3 Preferred Units for an aggregate purchase price of
$750,000

         On May 23, 2004, the Operating Partnership redeemed 26,650 Common
Operating Partnership Units from a single holder for an aggregate purchase price
of $961,540.

         In 2004, the Company issued 6,300 shares of its common stock upon
conversion of 6,300 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.



                                       24


         The Board of Directors authorized a program to purchase up to 1,000,000
shares of the Company's common stock on November 15, 2004. No repurchases were
performed under this program during the fourth quarter of 2004.




- ----------------------------------------------------------------------------------------------------------------------------
                                                                         TOTAL NUMBER OF
                                                                        SHARES PURCHASED AS        MAXIMUM NUMBER OF
                                                     AVERAGE PER          PART OF PUBLICLY       SHARES THAT MAY YET BE
                            TOTAL NUMBER OF          PRICE PAID           ANNOUNCED PLANS         PURCHASED UNDER THE
       PERIOD              SHARES PURCHASED            SHARE                OR PROGRAMS             PLANS OR PROGRAMS
- ----------------------------------------------------------------------------------------------------------------------------
                                                                                         
10/01/2004-10/31/2004             -                     $ -                    -                           -
- ----------------------------------------------------------------------------------------------------------------------------
11/01/2004-11/30/2004             -                     $ -                    -                      1,000,000
- ----------------------------------------------------------------------------------------------------------------------------
12/01/2004-12/31/2004             -                     $ -                    -                      1,000,000
- ----------------------------------------------------------------------------------------------------------------------------


EQUITY COMPENSATION PLAN INFORMATION

         The following table reflects information about the securities
authorized for issuance under the Company's equity compensation plans as of
December 31, 2004.




- ------------------------------------------------------------------------------------------------
                             (a)                  (b)                        (c)
- ------------------------------------------------------------------------------------------------
                                                                     NUMBER OF SECURITIES
                                                                    REMAINING AVAILABLE FOR
                    NUMBER OF SECURITIES    WEIGHTED-AVERAGE         FUTURE ISSUANCE UNDER
                      TO BE ISSUED UPON      EXERCISE PRICE           EQUITY COMPENSATION
                        EXERCISE OF          OF OUTSTANDING             PLANS (EXCLUDING
                     OUTSTANDING OPTIONS,   OPTIONS, WARRANTS       SECURITIES REFLECTED IN
PLAN CATEGORY        WARRANTS AND RIGHTS      AND RIGHTS                    COLUMN A)
- ------------------------------------------------------------------------------------------------
                                                            
Equity compensation
plans approved by
shareholders                 641,251              $29.97                      98,000
- ------------------------------------------------------------------------------------------------
Equity compensation
plans not approved by
shareholders (1)              55,129              $32.75                        0
- ------------------------------------------------------------------------------------------------
        TOTAL                696,380                                          98,000
- ------------------------------------------------------------------------------------------------


(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.


                                       25


ITEM 6.  SELECTED FINANCIAL DATA



                                                                                    YEAR ENDED DECEMBER 31,
                                                          --------------------------------------------------------------------------
                                                           2004 (c)        2003 (c)      2002 (b)          2001 (b)       2000 (b)
                                                          ---------       ---------      ---------        ---------      ---------
                                                                      (In thousands except for per share and other data)
                                                                                                          
REVENUES
Income from rental property                               $ 167,835       $ 159,115      $ 149,875        $ 136,969      $ 129,279
Revenues from home sales                                     17,837          19,516           --               --             --
Ancillary service revenues, net                               1,735           1,791           --               --             --
Interest                                                      6,633          11,354          7,990           10,305          9,386
Gain on sale of land                                          5,879            --             --               --             --
Other income                                                    934             676          2,304            3,695          4,112
                                                          ---------       ---------      ---------        ---------      ---------
    Total revenues                                          200,853         192,452        160,169          150,969        142,777

COSTS AND EXPENSES
Property operating and maintenance                           41,819          39,837         33,751           29,258         27,832
Cost of home sales                                           14,383          13,879           --               --             --
Real estate taxes                                            13,817          11,746         10,217            9,162          8,768
General and administrative                                   21,239          16,563          7,722            7,373          7,013
Depreciation and amortization                                45,395          44,120         37,900           32,716         29,900
Interest                                                     48,243          38,738         32,375           31,016         29,651
Extinguishment of debt                                       51,643            --             --               --             --
Deferred financing costs related
 to extinguished debt                                         5,557            --             --               --             --
Impairment charge                                              --             4,932           --               --             --
                                                                          ---------      ---------        ---------      ---------
    Total expenses                                          242,096         169,815        121,965          109,525        103,164

Equity income (loss) from affiliates                           (151)            667        (16,627)(a)          131            607
                                                          ---------       ---------      ---------        ---------      ---------
      Income (loss) from operations                         (41,394)         23,304         21,577           41,575         40,220

Less income (loss) allocated to minority
 interest:                                                     (926)          9,562          9,605           13,150         12,837

 Income (loss) from continuing operations                   (40,468)         13,742         11,972           28,425         27,383
 Income from discontinued operations                           --             9,972          1,620            5,485          5,911
                                                          ---------       ---------      ---------        ---------      ---------
      Net income (loss)                                   $ (40,468)      $  23,714      $  13,592        $  33,910      $  33,294
                                                          =========       =========      =========        =========      =========

Weighted average common shares outstanding:
  Basic                                                      18,318          18,206         17,595           17,258         17,304
                                                          =========       =========      =========        =========      =========
  Diluted                                                    18,318          18,345         17,781           17,440         17,390
                                                          =========       =========      =========        =========      =========
Basic earnings (loss) per share:
  Continuing operations                                   $   (2.21)      $    0.75      $    0.68        $    1.64      $    1.58
  Discontinued operations                                      --              0.55           0.09             0.32           0.34
                                                          ---------       ---------      ---------        ---------      ---------
  Net income (loss)                                       $   (2.21)      $    1.30      $    0.77        $    1.96      $    1.92
                                                          =========       =========      =========        =========      =========
Diluted earnings (loss) per share:
  Continuing operations                                   $   (2.21)      $    0.75      $    0.67        $    1.63      $    1.57
  Discontinued operations                                      --              0.54           0.09             0.31           0.34
                                                          ---------       ---------      ---------        ---------      ---------
  Net income (loss)                                       $   (2.21)      $    1.29      $    0.76        $    1.94      $    1.91
                                                          =========       =========      =========        =========      =========

Distributions per common share                            $    2.44       $    2.41      $    2.29        $    2.18      $    2.10
                                                          =========       =========      =========        =========      =========




                                       26


ITEM 6.  SELECTED FINANCIAL DATA



                                                                                 YEAR ENDED DECEMBER 31,
                                                     -------------------------------------------------------------------------------
                                                         2004            2003              2002            2001               2000
                                                      ----------       ----------       ----------       ----------       ----------
                                                                   (In thousands except for per share and other data)
                                                                                                           
BALANCE SHEET DATA:
Rental property, before accumulated                   $1,382,541       $1,220,405       $1,174,837       $  969,936       $  867,377
     depreciation
Total assets                                          $1,403,167       $1,221,574       $1,163,976       $  994,449       $  966,628
Total debt                                            $1,078,442       $  773,328       $  667,373       $  495,198       $  464,508
Stockholders' equity                                  $  211,746       $  326,610       $  319,532       $  329,641       $  336,034
OTHER DATA (AT END OF PERIOD):
Total properties                                             136              127              129              116              109
Total Sites                                               46,856           43,875           43,959           40,544           38,282



(a)      Included in equity income (loss) from affiliates in 2002 is a $13.6
         million valuation adjustment of the Company's investment in Origen.

(b)      Revenues and expenses for the years ended December 31, 2002, 2001, and
         2000 have been restated to reflect the reclassifications required under
         SFAS No. 144 for the four properties sold in 2003.

(c)      Selected financial data for 2004 and 2003 includes amounts from SHS
         which was consolidated during 2003.










                                       27

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 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, 2004, the Company owned and operated a portfolio of 136 developed
properties located in eighteen states, including 124 manufactured housing
communities, five recreational vehicle communities, and seven properties
containing both manufactured housing and recreational vehicle sites.

         The Company completed a significant restructuring of its capital and
operating debt during 2004. Secured debt financings of $734 million with average
terms approximating 10 years and weighted average interest rates of
approximately 5.0% were concluded, as well as the successful negotiation of a
new $115 million revolving line of credit at LIBOR + 1.75%. Proceeds from the
secured financings were used to retire existing debt, acquire communities, and
repurchase the Company's stock. The Company has also provided the required
notice to retire $50 million of 8.875% PPOP Units during the first quarter of
2005 and is authorized to repurchase up to 1 million additional shares of its
stock.

         During 2004 the Company acquired nine manufactured housing communities
comprising approximately 2950 developed and 570 undeveloped sites. The aggregate
purchase price was $120.4 million and included the assumption of approximately
$34.3 million in debt. Three of the communities are in northeast Atlanta, four
are located in Michigan and the remaining properties are located in Colorado and
Texas.

         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 131,000 in 2004. 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 appear to be abating as several large home manufacturers
are reporting operating income and 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.


                                       28


         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 nearly 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 rent the homes. At December 31,
2004, the Company had approximately 2,000 homes rented in its communities which
comprise over 46,000 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. Rental property is recorded at cost,
less accumulated depreciation. The Company measures the recoverability of its
assets in accordance with the 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, the impairment that would be recognized is measured by the amount
by which the carrying amount of the asset exceeds the fair value of the asset as
determined on a


                                       29


discounted net cash flow basis. Assets are tested for impairment 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.

         Notes Receivable. The Company evaluates the recoverability of its notes
receivable 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 agreement. The loan is then
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.

         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 and 7 to 15 years for furniture, fixtures and
equipment.

         Revenue Recognition. Rental income attributable to 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 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. The Company offers,
through its Home Buying Made Easy program, retail installment contracts at
interest rates of 4.99 to 7.99 percent to qualified buyers of homes within its
communities. The Company amortizes the interest discount from current market
rates related to this program into income over the term of the note. The Company
also bifurcates the discounted present value of the interest differential
between the home sale and the anticipated rental revenue as required by Emerging
Issues Task Force 00-21 "Revenue Arrangements with Multiple Deliverables". The
differential allocated to the home sale is recognized as a reduction of revenue
from the sale of the home and the differential allocated to future rental
revenue is amortized as rental discount over the term of the loan.

         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 and amortized over a seven year period. Costs associated with
implementing the Company's computer systems are capitalized and amortized over
the estimated useful lives of the related software and hardware.



                                       30


         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.













                                       31


RESULTS OF OPERATIONS

Comparison of year ended December 31, 2004 to year ended December 31, 2003

         For the year ended December 31, 2004, income from operations decreased
by $64.7 million from income of $23.3 million to a loss of $(41.4) million, when
compared to the year ended December 31, 2003. The decrease was due to increased
expenses of $14.5 million, debt extinguishment costs of $51.6 million, deferred
financing costs related to the extinguished debt of $5.6 million, Florida storm
damage of $0.6 million, and decreased equity income from affiliate of $0.8
million, offset by increased revenues of $8.4 million as described in more
detail below.

         Income from rental property increased by $8.7 million from $159.1
million to $167.8 million, or 5.5 percent, due to property acquisitions, rent
increases, and other community revenues.

         Interest income, including income from Origen, decreased by $4.8
million from $11.4 million to $6.6 million, or 42.1 percent, due primarily to a
decrease in interest earning notes and receivables.

         Other operating income increased by $0.2 million from $0.7 million to
$0.9 million, due primarily to increase in brokerage commissions.

         The decrease in revenue from home sales and increase in gain on sale of
land relate to operations of the manufactured home sales which is discussed in
detail below.

         Property operating and maintenance expenses increased by $2.0 million
from $39.8 million to $41.8 million, or 5.0 percent. The increase was due to
increases in utility costs ($0.7 million), payroll expense ($0.5 million),
repair and maintenance expense ($0.2 million), insurance expense ($0.3 million),
and miscellaneous other expenses ($0.3 million).

         Real estate taxes increased by $2.1 million from $11.7 million to $13.8
million, or 17.9 percent due to acquisitions made in 2004 ($0.7 million) and
increases in assessments and tax rates ($1.4 million).

         General and administrative expenses for rental property increased by
$2.0 million from $10.5 million to $12.5 million, due to compensation expenses
($0.7 million), Michigan Single Business tax ($0.3 million), system conversion
costs ($0.4 million), Sarbanes-Oxley Act compliance costs ($0.3 million), and
miscellaneous other expenses ($0.3 million).

         Depreciation and amortization increased by $1.3 million from $44.1
million to $45.4 million, or 2.9 percent, due primarily to additional investment
in rental property.

         Interest expense increased by $9.5 million from $38.7 million to $48.2
million, or 24.5 percent, due to increased debt levels somewhat offset by lower
interest rates and the reclassification of dividends paid on Preferred Operating
Partnership Units ("POP Units") as interest expense pursuant to the adoption of
Statement of Financial Accounting Standards No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liability and Equity"
("SFAS 150").





                                      32


         Debt extinguishment expense 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
repaid were expensed.

Sun Home Services

         The following table summarizes certain financial and statistical data
for Sun Home Services for the years ended December 31, 2004 and 2003:



                                                                                       Increase/
                                                  2004               2003             (Decrease)       Percent Change
                                                 -------            -------           ----------       --------------

                                                                                                
New home sales revenues                          $ 9,941            $13,169            $(3,228)            -24.5%
Cost of sales                                      7,609              9,159             (1,550)            -16.9%
                                                 -------            -------            -------             ------
Gross profit                                       2,332              4,010             (1,678)            -41.8%
                                                 =======            =======            =======             ======

Pre-owned home sales revenues                    $ 7,896            $ 6,347            $ 1,549              24.4%
Cost of sales                                      6,774              4,720              2,054              43.5%
                                                 -------            -------            -------             ------
Gross profit                                       1,122              1,627               (505)            -31.0%
                                                 =======            =======            =======             ======

Ancillary revenue, net                           $ 1,735            $ 1,791            $   (56)             -3.1%
                                                 =======            =======            =======             ======

Home sales volumes:
     New homes                                       169                257                (88)            -34.2%
     Pre-owned homes                                 368                283                 85              30.0%




         New home sales declined by 34.2 percent, while revenues and costs of
sales declined by 24.5 and 16.9 percent, respectively, resulting in lower gross
profit due to competition from value-priced pre-owned homes. Pre-owned home unit
sales increased by 30.0 percent while revenues and cost of sales increased by
24.4 percent and 43.5 percent, respectively. Gross profit declined by 31.0
percent on pre-owned homes in response to a management strategy to reduce sales
price to generate additional sales.


Comparison of year ended December 31, 2003 to year ended December 31, 2002

         For the year ended December 31, 2003, income from operations increased
by $1.7 million from $21.6 million to $23.3 million, when compared to the year
ended December 31, 2002. The increase was due to increased revenues of $32.3
million and increased results from affiliates of $17.3 million partially offset
by increased expenses of $47.9 million. The year 2003 included SHS on a
consolidated basis as discussed below.

         Income from rental property increased by $9.2 million from $149.9
million to $159.1 million, or 6.2 percent, due to rent increases and other
community revenues ($3.4 million) and acquisitions ($5.8 million).

         Interest income, including income from Origen, increased by $3.4
million from $8.0 million to $11.4 million, or 42.1 percent, due principally to
larger outstanding balances of notes and investments at higher rates of
interest.



                                       33


         Other operating income decreased by $1.6 million from $2.3 million to
$0.7 million, due primarily to reduced development fee income.

         The remaining revenue increases of $21.3 million relate to the
consolidation of Sun Home Services which is discussed in detail below.

         Property operating and maintenance expenses increased by $6.1 million
from $33.7 million to $39.8 million, or 18.0 percent. The increase was primarily
due to increases in utility costs ($1.8 million) and increases in repair and
maintenance expenses ($1.3 million). Acquisitions during 2002 and the
consolidation of SunChamp properties accounted for the remaining increase of
$3.0 million.

         Real estate taxes increased by $1.5 million from $10.2 million to $11.7
million, or 15.0 percent due to acquisitions made in 2002 ($0.7 million) and
increases in assessments and tax rate ($0.8 million).

         General and administrative expenses increased by $8.9 million from $7.7
million to $16.6 million, due to the consolidation of Sun Home Services ($6.0
million), professional fees ($0.4 million), expenses related to office
relocation ($0.2 million), Michigan Single Business tax ($0.2 million),
compensation expenses, including benefits, primarily related to the SunChamp
acquisition and a systems conversion ($1.7 million), and assorted other minor
increases ($0.4 million).

         Depreciation and amortization increased by $6.2 million from $37.9
million to $44.1 million, or 16.4 percent, due primarily to the consolidation of
Sun Home Services ($1.0 million) and additional investment in rental property.

         Interest expense increased by $6.3 million from $32.4 million to $38.7
million, or 19.4 percent, due to increased debt levels partially offset by lower
interest rates ($1.5 million), the reclassification of dividends paid on POP
Units as interest expense pursuant to the adoption of SFAS 150 ($2.0 million),
decreased capitalized interest ($0.8 million), an increase in financing costs
($0.6 million), and an increase in interest rates related to fixing rates on
$75.0 million of debt ($2.7 million). These increases were partially offset by
$1.3 million of income related primarily to the change in market value of an
interest rate swap contract that does not qualify for hedge accounting.

         The $4.9 million impairment charge relates to a reduction in the book
value of a new community development due to the impracticality of future phase
construction.

         Equity income from affiliates of $0.7 million represents the Company's
one-third interest in the operations of Origen for its initial operating period
after a recapitalization in October, 2003.

         The remaining expense increase of $13.9 million relates to the
consolidation of Sun Home Services which is discussed in detail below.



                                       34


Sun Home Services

         Prior to January 1, 2003, the results of operations of Sun Home
Services were accounted for using the equity method and reported as a single
line item called equity in income from affiliates. As the Company is the primary
beneficiary of the results of operations of Sun Home Services, it is appropriate
to consolidate Sun Home Services at December 31, 2003. This has no effect on
previously reported net income. In the table below, the year 2002 is presented
as if SHS was consolidated ("Proforma") as of December 31, 2002 for comparative
purposes.

         The following table summarizes certain financial and statistical data
for Sun Home Services for the years ended December 31, 2003 and 2002:




                                                                                Increase/
                                           2003               2002             (Decrease)       Percent Change
                                          -------            -------           -----------     ----------------
                                                           (Pro Forma)
                                                                                         
New home sales revenues                   $13,169            $15,890            $(2,721)            -17.1%
Cost of sales                               9,159             12,907             (3,748)            -29.0%
                                          -------            -------            -------             -----
Gross profit                                4,010              2,983              1,027              34.4%
                                          =======            =======            =======             =====

Pre-owned home sales revenues             $ 6,347            $ 3,214            $ 3,133              97.5%
Cost of sales                               4,720              2,586              2,134              82.5%
                                          -------            -------            -------             -----
Gross profit                                1,627                628                999             159.1%
                                          =======            =======            =======             =====

Ancillary revenue, net                    $ 1,791            $   457            $ 1,334             291.9%
                                          =======            =======            =======             =====

Home sales volumes:
     New homes                                257                286                (29)            -10.1%
     Pre-owned homes                          283                174                109              62.6%



         New home sales declined by 10.1 percent, while revenues and costs of
sales declined by 17.1 and 29.0 percent, respectively. Gross profit increased by
34.4 percent as cost of sales declined by more than revenues due to the purchase
of new homes at a substantial discount. Pre-owned home unit sales increased by
62.6 percent while revenues and cost of sales increased by 97.5 percent and 82.5
percent, respectively. Gross profit increased by 159.1 percent as revenues grew
more than cost of sales due to strong demand for the value in pre-owned homes.

         The increase in ancillary revenue, net, is primarily due to increased
activity in the Company's rental home program.









                                       35


SAME PROPERTY INFORMATION

         The following table reflects property-level financial information as of
and for the years ended December 31, 2004 and 2003. The "Same Property" data
represents information regarding the operation of communities owned as of
January 1, 2003 and December 31, 2004. 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, 2003 and new
development communities.



                                                                 SAME PROPERTY                   TOTAL PORTFOLIO
                                                         ---------------------------      ---------------------------
                                                            2004             2003           2004              2003
                                                         ----------       ----------      ----------       ----------
                                                               (in thousands)                        (in thousands)

                                                                                               
Income from rental property                              $ 146,797        $ 141,130       $ 167,835        $ 159,115
                                                         ----------       ----------      ----------       ----------
Property operating expenses:
     Property operating and maintenance                     28,603           28,334          41,819           39,837
     Real estate taxes                                      11,905           10,843          13,817           11,746
                                                         ----------       ----------      ----------       ----------
            Property operating expenses                     40,508           39,177          55,636           51,583
                                                         ----------       ----------      ----------       ----------

Property net operating income (1)                        $ 106,289        $ 101,953       $ 112,199        $ 107,532
                                                         ==========       ==========      ==========       ==========

Number of properties                                           108              108             136              127
Developed sites                                             39,686           39,746          46,856           43,875
Occupied sites                                              34,272           34,958          39,040           37,394
Occupancy %                                                  87.4% (2)        89.4% (2)       83.8% (2)        86.1% (2)
Weighted Average monthly rent per site                       $ 345 (2)        $ 329 (2)       $ 342 (2)        $ 328 (2)
Sites available for development                              1,521            1,545           7,277            6,756
Sites planned for development in next year                      57               30             208              258




 (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) Occupancy % and weighted average rent relates to manufactured housing sites,
excluding recreational vehicle sites.


                                       36


        On a same property basis, property net operating income increased by
$4.3 million from $102.0 million to $106.3 million, or 4.2 percent. Income from
property increased by $5.7 million from $141.1 million to $146.8 million, or 4.0
percent, due primarily to increases in rents including water and property tax
pass through.

        Property operating expenses increased by $1.3 million from $39.2 million
to $40.5 million, or 3.3 percent, due to increases in real estate taxes ($1.1
million), utilities and other ($0.2 million).

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, property acquisitions, development
and expansion of properties, capital improvements of properties, the purchase of
new and pre-owned homes and debt repayment.

        The Company expects to meet its short-term liquidity requirements
through its working capital provided by operating activities and through its
$115.0 million line of credit. 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 $5 million in
developments consisting of expansions to existing communities and the
development of new communities during 2005. The Company expects to finance these
investments by using net cash flows provided by operating activities and by
drawing upon its line of credit.

        Furthermore, the Company may invest substantial amounts in the
acquisition of properties during 2005, depending upon a number of factors,
including the availability of high-quality properties that meet the Company's
criteria for acquisition. The Company will finance these investments using the
proceeds from its secured financing transactions, the temporary use of its line
of credit until permanent secured financing can be arranged and through the
assumption of existing debt on the properties.

        Cash and cash equivalents increased by $28.5 million to $52.6 million at
December 31, 2004 compared to $24.1 million at December 31, 2003. Net cash
provided by operating activities decreased by $4.8 million to $57.8 million for
the year ended December 31, 2004 compared to $62.6 million for the year ended
December 31, 2003.

        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 "Factors that May
Affect Future Results."

        As previously discussed, the Company completed a significant
restructuring of its capital


                                       37


and operating debt during 2004. The Company securitized an additional 74 of its
136 Properties providing significant proceeds for the repayment of existing
higher rate debt, property acquisitions and stock repurchases.

        During 2004 the Company acquired nine manufactured housing communities
with an aggregate purchase price of $120.4 million. The properties were
purchased with cash provided from secured financing transactions and the
assumption of approximately $34.3 million in debt.

        The Company has a $115 million unsecured line of credit facility, which
bears interest at LIBOR + 1.75% and matures in September 2007, with a one-year
optional extension. At December 31, 2004, $1.3 million of availability was used
to back standby letters of credit and $113.7 million was available to be drawn
under the facility. 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, 2004.

        The Company's primary long-term liquidity needs are principal payments
on outstanding indebtedness. At December 31, 2004, 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                       $   40,837       $      757       $   40,080       $     --         $     --
Collateralized term loan - FNMA                   389,154            1,531            6,149            7,993          373,481
Collateralized term loan - B of A                 496,031             --              8,709           15,851          471,471
Senior notes                                        5,017            5,017             --               --               --
Mortgage notes, other                              85,280           13,432           48,635           18,452            4,761
Redeemable Preferred OP Units                      62,123             --             12,675             --             49,448
                                               ----------       ----------       ----------       ----------       ----------
                                               $1,078,442       $   20,737       $  116,248       $   42,296       $  899,161
                                               ==========       ==========       ==========       ==========       ==========


         Interest expense is a material cash requirement of the Company. The
Company's projected interest expense is $57.9 million, $56.3 million, $61.9
million, $62.8 million, and $61.3 million for the years 2005, 2006, 2007, 2008,
and 2009, respectively.

         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, 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
"Factors That May Affect Future Results". 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.




                                       38


        At December 31, 2004, the Company's debt to total market capitalization
approximated 54.8 percent (assuming conversion of all Common OP Units to shares
of common stock). The debt has a weighted average maturity of approximately 8.5
years and a weighted average interest rate of 5.1 percent.

        Capital expenditures for the years ended December 31, 2004 and 2003
included recurring capital expenditures of $6.6 million (excluding $0.4 million
related to a software conversion) and $6.5 million (excluding $1.7 million
related to a main office relocation and $3.4 million related to software
conversion), respectively.

        Net cash used in investing activities was $152.2 million for the year
ended December 31, 2004 compared to $58.2 million in the prior year. The
difference is due to: increased investment in rental properties of $97.7
million; increased short-term investments of $45.0 million; decreased proceeds
from property and land disposition of $14.2 million; decreased repayments of
notes receivables and officer's notes, net of $11.7 million; offset by a
reduction in investment in and advances to affiliate of $49.1 million, and
increased net proceeds from loans sold to and purchased from Origen of $25.5
million.

        Net cash provided by financing activities was $122.9 million for the
year ended December 31, 2004, compared to $17.0 million in the prior year. The
difference is primarily due to changes in net proceeds from notes payable and
other debt, inclusive of repayments on line of credit, of $177.0 million, offset
by increased distributions of $1.9 million, changes in net proceeds from common
stock issuance of $25.2 million, increased payments of deferred financing costs
of $6.8 million, and treasury stock purchases of $37.2 million.

RATIO OF EARNINGS TO FIXED CHARGES

         The Company's ratio of earnings to fixed charges for the year ended
December 31, 2004 was less than 1:1. The earnings deficiency required to bring
the ratio to 1:1 is $46.1 million. The Company's ratio of earnings to fixed
charges for the years ended December 31, 2003 and 2002 was 1.29:1 and 1.68:1,
respectively.

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.












                                       39


SAFE HARBOR STATEMENT

        This Form 10-K contains various "forward-looking statements" within the
meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934,
and the Company intends that such forward-looking statements will be subject to
the safe harbors created thereby. For this purpose, any statements contained in
this Form 10-K that relate to prospective events or developments are deemed to
be forward-looking statements. Words such as "believes," "forecasts,"
"anticipates," "intends," "plans," "expects," "will" and similar expressions are
intended to identify forward-looking statements. These forward-looking
statements reflect the Company's current views with respect to future events and
financial performance, but involve known and unknown risks and uncertainties,
both general and specific to the matters discussed in this Form 10-K. These
risks and uncertainties may cause the actual results of the Company to be
materially different from any future results expressed or implied by such
forward looking statements. Such risks and uncertainties include the national,
regional and local economic climates, the ability to maintain rental rates and
occupancy levels, competitive market forces, changes in market rates of
interest, the ability of manufactured home buyers to obtain financing, the level
of repossessions by manufactured home lenders and those referenced under the
headings entitled "Factors That May Affect Future Results" or "Risk Factors"
contained in this Form 10-K and the Company's filings with the Securities and
Exchange Commission. The forward-looking statements contained in this Form 10-K
speak only as of the date hereof and the Company expressly disclaims any
obligation to provide public updates, revisions or amendments to any
forward-looking statements made herein to reflect changes in the Company's
expectations of future events.

RECENT ACCOUNTING PRONOUNCEMENTS

        In December 2004, the Financial Accounting Standards Board (FASB) issued
Share-Based Payment Statement No. 123(R), that addresses the accounting for
share-based payment transactions in which an enterprise receives employee
services in exchange for (a) equity instruments of the enterprise or (b)
liabilities that are based on the fair value of the enterprise's equity
instruments or that may be settled by the issuance of such equity instruments.
Under the FASB's statement, all forms of share-based payments to employees,
including employee stock options, must be treated the same as other forms of
compensation by recognizing the related cost in the income statement. The
expense of the award would generally be measured at fair value at the grant
date. Current accounting guidance requires that the expense relating to
so-called fixed plan employee stock options only be disclosed in the footnotes
to the financial statements. The Statement eliminates the ability to account for
share-based compensation transactions using APB Opinion No. 25, Accounting for
Stock Issued to Employees for options granted after June 15, 2005. We will be
required to apply SFAS No. 123(R) as of the first interim reporting period that
begins after June 15, 2005, and we plan to adopt it using the
modified-prospective method, effective July 1, 2005. The Company is currently
evaluating the impact of this standard on its results of operations and
financial position.












                                       40



OTHER

        Funds from operations ("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 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, 2004, 2003,
2002 (in thousands):









                                       41


                            SUN COMMUNITIES, INC.
            RECONCILIATION OF NET INCOME TO FUND FROM OPERATIONS
        (AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE/OP UNIT AMOUNTS)




                                                                                        2004              2003                2002
                                                                                      --------           --------           --------
                                                                                                                   
Net income (loss)                                                                     $(40,468)          $ 23,714           $ 13,592
Adjustments:
   Depreciation and amortization                                                        45,589             43,458             38,262
   Valuation adjustment (1)                                                                528               (879)               449
   Allocation of SunChamp losses (2)                                                       300              4,548              1,315
   (Gain) loss on dispositions, net                                                     (3,880)            (8,590)            13,612
   Income (loss) allocated to common minority interests                                 (5,364)             3,274              2,003
                                                                                      ---------          ---------          --------
Funds from operations (FFO)                                                           $ (3,295)          $ 65,525           $ 69,233

FFO - Continuing Operations                                                           $ (3,295)          $ 63,605           $ 67,055
                                                                                      =========          =========          ========
FFO - Discontinued Operations                                                         $   --             $  1,920           $  2,178
                                                                                      =========          =========          ========

Weighted average common shares/OP Units outstanding:
          Basic                                                                         20,792             20,717             20,177
                                                                                      =========          =========          ========
          Diluted                                                                       20,792             20,856             20,363
                                                                                      =========          =========          ========

Continuing Operations:
FFO per weighted average Common Share/OP Unit - Basic                                 $  (0.16)          $   3.07           $   3.32
                                                                                      =========          =========          ========
FFO per weighted average Common Share/OP Unit - Diluted                               $  (0.16)          $   3.05           $   3.29
                                                                                      =========          =========          ========

Discontinued Operations:
FFO per weighted average Common Share/OP Unit - Basic                                 $   --             $   0.09           $   0.11
                                                                                      =========          =========          ========
FFO per weighted average Common Share/OP Unit - Diluted                               $   --             $   0.09           $   0.11
                                                                                      =========          =========          ========

Total Operations:
FFO per weighted average Common Share/OP Unit - Basic                                 $  (0.16)          $   3.16           $   3.43
                                                                                      =========          =========          ========
FFO per weighted average Common Share/OP Unit - Diluted                               $  (0.16)          $   3.14           $   3.40
                                                                                      =========          =========          ========


(1)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.

(2)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.


                                       42


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 4.93 percent for the period April
2003 through July 2009, another of the swap agreements fixes $25 million of
variable rate borrowings at 5.37 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
3.97 percent for the period April 2003 through July 2007. The interest rate cap
agreement has a cap rate of 9.49 percent, a notional amount of $152.4 million
and a termination date of April 13, 2006. Each of the Company's derivative
contracts is based upon 90-day LIBOR.

         The Company's remaining variable rate debt totals $108.5 million as of
December 31, 2004 which bears interest at Prime, various LIBOR or FNMA
Discounted Mortgage Backed Securities ("DMBS") rates. If Prime, LIBOR, or DMBS
increased or decreased by 1.0 percent during the years ended December 31, 2004
and 2003, the Company believes its interest expense would have increased or
decreased by approximately $1.7 million and $2.2 million, respectively, based on
the $169.5 million and $219.8 million average balance outstanding under the
Company's variable rate debt facilities for the year ended December 31, 2004 and
2003, respectively.

         Additionally, the Company had $14.7 million and $32.1 million LIBOR
based variable rate mortgage and other notes receivable as of December 31, 2004
and 2003. If LIBOR increased or decreased by 1.0 percent during the years ended
December 31, 2004 and 2003, the Company believes interest income would have
increased or decreased by approximately $0.19 million and $0.30 million,
respectively, based on the $19.3 million and $30.2 million average balance
outstanding on all variable rate notes receivable for the year ended December
31, 2004 and 2003, respectively.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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


                                       43


            ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                       ACCOUNTING AND FINANCIAL DISCLOSURE

         We have previously reported the information required by this item in a
current report on Form 8-K initially filed with the SEC on July 14, 2003, as
amended by Form 8-K/A filed with the SEC on July 15, 2003.

ITEM 9A. 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, 2004. 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,
2004 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, 2004. 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 2004 financial statements under the
captions entitled "Management's Report on Internal Control Over Financial
Reporting" and "Report of Independent Registered Public Accounting Firm on
Internal Control Over Financial Reporting" and are incorporated herein by
reference.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

        There have been no significant changes in the Company's internal control
over financial reporting during the quarterly period ended December 31, 2004
that have materially affected, or are reasonably likely to materially affect,
the Company's internal control over financial reporting.


                                       44


                                    PART III

        The information required by ITEMS 10, 11, 12, 13, AND 14 will be
included in the Company's proxy statement for its 2005 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)      The following documents are filed herewith as part of this
                  Form 10-K:

                  (1) A list of the financial statements required to be filed as
a part of this Form 10-K is shown in the "Index to the Consolidated Financial
Statements and Financial Statement Schedule" filed herewith.

                  (2) A list of the financial statement schedules required to be
filed as a part of this Form 10-K is shown in the "Index to the Consolidated
Financial Statements and Financial Statement Schedule" filed herewith.

                  (3) A list of the exhibits required by Item 601 of Regulation
S-K to be filed as a part of this Form 10-K is shown on the "Exhibit Index"
filed herewith.











                                       45


                                   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, 2005
                                SUN COMMUNITIES, INC., a
                                Maryland corporation

                                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                          Chief Executive Officer, President and                 March 15, 2005
- ---------------------------                   Chairman of the Board of Directors
Gary A. Shiffman

/s/ Jeffrey P. Jorissen                       Executive Vice President, Chief Financial              March 15, 2005
- ---------------------------                   Officer, Treasurer, Secretary and
Jeffrey P. Jorissen                           Principal Accounting Officer

/s/ Paul D. Lapides                           Director                                               March 15, 2005
- ---------------------------
Paul D. Lapides

/s/ Ted J. Simon                              Director                                               March 15, 2005
- ---------------------------
Ted J. Simon

/s/ Clunet R. Lewis                           Director                                               March 15, 2005
- ---------------------------
Clunet R. Lewis

/s/ Ronald L. Piasecki                        Director                                               March 15, 2005
- ---------------------------
Ronald L. Piasecki

/s/ Arthur A. Weiss                           Director                                               March 15, 2005
- ---------------------------
Arthur A. Weiss



                                       46


                                  EXHIBIT LIST



   EXHIBIT                                                                                        METHOD OF
    NUMBER                                  DESCRIPTION                                            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)
     4.1      Indenture, dated as of April 24, 1996, among Sun Communities, Inc., Sun                (3)
              Communities Operating Limited Partnership (the "Operating Partnership") and
              Bankers Trust Company, as Trustee
     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          (7)
              Operating Partnership and Bankers Trust Company, as Trustee
     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.                  (9)
              Designating a Series of Preferred Stock and Fixing Distribution and other
              Rights in such Series
     4.8      Articles Supplementary of Board of Directors of Sun Communities, Inc.                  (11)
              Designating a Series of Preferred Stock
     10.1     Second Amended and Restated Agreement of Limited Partnership of Sun Communities        (6)
              Operating Limited Partnership
     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               (1)
              directors, officers and other individuals#
     10.5     Form of Non-Employee Director Stock Option Agreement between Sun Communities,          (4)
              Inc. and certain directors#
     10.6     Form of Restricted Stock Award Agreement#                                              (19)
     10.7     Amended and Restated Loan Agreement between Sun Communities Funding Limited            (7)
              Partnership and Lehman Brothers Holdings Inc.
     10.8     Amended and Restated Loan Agreement among Miami Lakes Venture Associates, Sun          (7)
              Communities Funding Limited Partnership and Lehman Brothers Holdings Inc.
     10.9     Form of Indemnification Agreement between each officer and director of Sun             (7)
              Communities, Inc. and Sun Communities, Inc.
    10.10     Loan Agreement among the Operating Partnership, Sea Breeze Limited Partnership         (7)
              and High Point Associates, LP.
    10.11     Option Agreement by and between the Operating Partnership and Sea Breeze               (7)
              Limited Partnership
    10.12     Option Agreement by and between the Operating Partnership and High Point               (7)
              Associates, LP
    10.13     Stock Pledge Agreement between Gary A. Shiffman and the Operating Partnership          (5)
              for 94,570 shares of Common Stock
    10.14     Stock Pledge Agreement between Gary A. Shiffman and the Operating Partnership          (5)
              for 305,430 shares of Common Stock
    10.15     Stock Pledge Agreement between Gary A. Shiffman and the Operating Partnership          (7)
              with respect to 80,000 shares of Common Stock
    10.16     Employment Agreement between Sun Communities, Inc. and Gary A. Shiffman, dated         (17)
              as of January 1, 2005#
    10.17     Employment Agreement between Sun Communities, Inc. and Jeffrey P. Jorissen,            (17)
              dated as of January 1, 2005#



                                       47




 EXHIBIT                                                                                            METHOD OF
  NUMBER                                  DESCRIPTION                                                FILING
 --------                                 -----------                                                ------
                                                                                            
    10.18     Employment Agreement by and between Brian W. Fannon and Sun Communities, Inc.,           (17)
              dated as of January 1, 2005#
    10.19     Long Term Incentive Plan                                                                  (7)
    10.20     Sun Communities, Inc. 1998 Stock Purchase Plan#                                           (9)
    10.21     Facility and Guaranty Agreement among Sun Communities, Inc., the Operating                (9)
              Partnership, Certain Subsidiary Guarantors and First National Bank of Chicago,
              dated December 10, 1998
    10.22     Rights Agreement between Sun Communities, Inc. and State Street Bank and Trust            (8)
              Company, dated April 24, 1998
    10.23     Contribution Agreement, dated as of September 29, 1999, by and among Sun                  (11)
              Communities, Inc., the Operating Partnership, Belcrest Realty Corporation and
              Belair Real Estate Corporation
    10.24     One Hundred Third Amendment to Second Amended and Restated Limited Partnership            (11)
              Agreement of the Operating Partnership
    10.25     One Hundred Eleventh Amendment to Second Amended and Restated Limited                     (12)
              Partnership Agreement of the Operating Partnership
    10.26     One Hundred Thirty-Sixth Amendment to Second Amended and Restated Limited                 (12)
              Partnership Agreement of the Operating Partnership
    10.27     One Hundred Forty-Fifth Amendment to Second Amended and Restated Limited                  (12)
              Partnership Agreement of the Operating Partnership
    10.28     One Hundred Seventy-Second Amendment to Second Amended and Restated Limited               (19)
              Partnership Agreement of the Operating Partnership
    10.29     Restricted Stock Award Agreement between Sun Communities, Inc. and Gary A.                (19)
              Shiffman, dated May 10, 2004#
    10.30     First Amendment to Restricted Stock Award Agreement between Sun Communities,              (19)
              Inc., and Gary A. Shiffman#
    10.31     Restricted Stock Award Agreement between Sun Communities, Inc. and Jeffrey P.             (19)
              Jorissen, dated May 10, 2004#
    10.32     First Amendment to Restricted Stock Award Agreement between Sun Communities,              (19)
              Inc. and Jeffrey P. Jorissen#
    10.33     Form of Loan Agreement dated June 9, 2004 by and among Sun Candlewick LLC, Sun            (15)
              Silver Star LLC and Aspen-Holland Estates, LLC, as Borrowers, and Bank of
              America, N.A., as Lender
    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 Pool 8 LLC, as               (15)
              Borrower, and Bank of America, N.A., as Lender
    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 Continental                  (15)
              Estates LLC as Borrower, and Bank of America, N.A., as Lender
    10.38     Schedule identifying substantially identical agreements to Exhibit 10.37                  (15)
    10.39     Form of Loan Agreement dated June 9, 2004 by and between Sun Indian Creek LLC,            (15)
              as Borrower, and Bank of America, N.A., as Lender
    10.40     Schedule identifying substantially identical agreements to Exhibit 10.39                  (15)
    10.41     Amended And Restated Master Credit Facility Agreement dated April 28, 2004 by             (15)
              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




                                       48




   EXHIBIT                                                                                        METHOD OF
    NUMBER                                  DESCRIPTION                                            FILING
   --------                                 -----------                                            ------
                                                                                            
  10.42   Appendix I (definitions) to Amended And Restated Master Credit Facility                   (15)
          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

  10.43   Fixed Facility Note dated April 5, 2004 made by Sun Secured Financing LLC,                (15)
          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
  10.44   Fixed Facility Note dated April 28, 2004 made by Sun Secured Financing LLC, Sun           (15)
          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
  10.45   Variable Facility Note dated April 28, 2004 made by Sun Secured Financing LLC,            (15)
          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
  10.46   Fourth Amended and Restated Variable Facility Note dated April 28, 2004 made by           (15)
          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
  10.47   Credit Agreement, dated September 30, 2004, among the Company, the Operating              (16)
          Partnership, Standard Federal Bank National Association, LaSalle Bank National
          Association and other lenders
  10.48   Second Amended and Restated Promissory Note (Secured), dated as of July 15,               (13)
          2002, made by Gary A. Shiffman in favor of the Operating Partnership
  10.49   First Amended and Restated Promissory Note (Unsecured), dated as of July 15,              (13)
          2002, made by Gary A. Shiffman in favor of the Operating Partnership
  10.50   First Amended and Restated Promissory Note (Secured), dated as of July 15,                (13)
          2002, made by Gary A. Shiffman in favor of the Operating Partnership
  10.51   Second Amended and Restated Promissory Note (Unsecured), dated as of July 15,             (13)
          2002, made by Gary A. Shiffman in favor of the Operating Partnership
  10.52   Second Amended and Restated Promissory Note (Secured), dated as of July 15,               (13)
          2002, made by Gary A. Shiffman in favor of the Operating Partnership
  10.53   Lease, dated November 1, 2002, by and between the Operating Partnership as                (14)
          Tenant and American Center LLC as Landlord
  10.54   Concurrent Private Placement Agreement dated October 8, 2003 among Sun OFI,               (18)
          Inc., Origen Financial, Inc., and the Purchasers (as defined therein)



                                       49




   EXHIBIT                                                                                        METHOD OF
    NUMBER                                  DESCRIPTION                                            FILING
   --------                                 -----------                                            ------
                                                                                        
  10.55   Registration Rights Agreement dated as of October 8, 2003 among Sun OFI, Inc.,            (18)
          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
   12.1   Computation of Ratio of Earnings to Fixed Charges and Ratio Earnings to                   (19)
          Combined Fixed Charges and Preferred Dividends
   21.1   List of Subsidiaries of Sun Communities, Inc.                                             (19)
   23.1   Consent of PricewaterhouseCoopers LLP                                                     (19)
   23.2   Consent of Grant Thornton LLP                                                             (19)
   31.1   Certification of Chief Executive Officer pursuant to Section 302 of the                   (19)
          Sarbanes-Oxley Act of 2002
   31.2   Certification of Chief Financial Officer pursuant to Section 302 of the                   (19)
          Sarbanes-Oxley Act of 2002
   32.1   Certification of Chief Executive Officer and Chief Financial Officer pursuant             (19)
          to Section 906 of the Sarbanes-Oxley Act of 2002



- -------------------
(1)      Incorporated by reference to Sun Communities, Inc.'s Registration
         Statement No. 33-69340.

(2)      Incorporated by reference to Sun Communities, 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 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 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.

                                       50


(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)     Filed herewith.

#        Management contract or compensatory plan or arrangement.




                                       51


                              SUN COMMUNITIES, INC.
          INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL
                               STATEMENT SCHEDULE



                                                                                         PAGE

                                                                               
Management's Report on Internal Control Over Financial Reporting                          F-2

Report of Independent Registered Public Accounting Firm on Internal Control         F-3 - F-4
Over Financial Reporting - Grant Thornton LLP

Report of Independent Registered Public Accounting Firm - Grant Thornton LLP              F-5

Report of Independent Registered Public Accounting Firm - PricewaterhouseCoopers LLP      F-6

Financial Statements:

   Consolidated Balance Sheets as of December 31, 2004 and 2003                           F-7

   Consolidated Statements of Operations
   for the Years Ended December 31, 2004, 2003 and 2002                                   F-8

   Consolidated Statements of Comprehensive Income (Loss)
   for the Years Ended December 31, 2004, 2003 and 2002                                   F-9

   Consolidated Statements of Stockholders' Equity
   for the Years Ended December 31, 2004, 2003 and 2002                                  F-10

   Consolidated Statements of Cash Flows
   for the Years Ended December 31, 2004, 2003 and 2002                                  F-11

   Notes to Consolidated Financial Statements                                     F-12 - F-32


Schedule III - Real Estate and Accumulated Depreciation                           F-33 - F-37




                                      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:

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

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

               o     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

               o     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, 2004. 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, 2004, 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, independent registered public accounting firm, who
audited and reported on the financial statements of the Company included in this
report as of and for the year ended December 31, 2004 and 2003, has issued an
attestation report on management's assessment of internal control over financial
reporting.



                                      F-2


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL
OVER FINANCIAL REPORTING

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, 2004, 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, 2004, 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



                                      F-3

December 31, 2004, based on criteria established in Internal Control -
Integrated 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, 2004 and 2003, and the
related consolidated statements of operations, comprehensive income, changes in
stockholders' equity, and cash flows for each of the two years in the period
ended December 31, 2004, and our report dated March 15, 2005, expressed an
unqualified opinion on those financial statements.


/s/ GRANT THORNTON LLP

Southfield, Michigan
March 15, 2005



                                      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, 2004 and 2003, and the related
consolidated statements of operations, comprehensive income, changes in
stockholders' equity, and cash flows for each of the two years then ended. 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, 2004 and 2003, and the results of their
operations and their cash flows for each of the two years then ended in
conformity with accounting principles generally accepted in the United States of
America.

As discussed in Note 1 to the consolidated financial statements, the Company
adopted Financial Accounting Standards Board Interpretation No. 46(R),
"Consolidation of Variable Interest Entities" and Statement of Financial
Accounting Standards No. 150 "Accounting for Certain Financial Instruments with
Characteristics of Both Liabilities and Equity" during 2003.

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 purposes 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, 2004, 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,
2005, expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

Southfield, Michigan
March 15, 2005


                                      F-5


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
Sun Communities, Inc.:

In our opinion, based on our audit and the report of other auditors, the
consolidated statements of operations, comprehensive income, stockholders'
equity and cash flows for the year ended December 31, 2002 present fairly, in
all material respects, the results of operations and cash flows of Sun
Communities, Inc. and its subsidiaries (the "Company") for the year ended
December 31, 2002 in conformity with accounting principles generally accepted in
the United States of America. 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 audit. We did not audit the financial
statements of Origen Financial, L.L.C., an investee of the Company, which
financial statements reflect total revenues of $20,385,000 for the period ended
December 31, 2002. Those statements were audited by other auditors whose report
thereon has been furnished to us, and our opinion expressed herein, insofar as
it relates to the amounts included for Origen Financial. L.L.C., is based solely
on the report of the other auditors. We conducted our audit of these statements
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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit and the report of other auditors provide a reasonable
basis for our opinion.


PricewaterhouseCoopers LLP

Detroit, Michigan
March 12, 2003 except for Note 3 as to
which the date is March 12, 2004





                                      F-6


                              SUN COMMUNITIES, INC.
                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2004 AND 2003
                             (AMOUNTS IN THOUSANDS)




                                                                  2004              2003
                                                               -----------      -----------
                                                                          
ASSETS
  Investment in rental property, net                           $ 1,133,873      $ 1,010,484
  Cash and cash equivalents                                         52,586           24,058
  Short-term Investments                                            44,975               --
  Inventory of manufactured homes                                   25,964           17,236
  Investment in affiliate                                           48,360           50,667
  Notes and other receivables                                       45,037           74,828
  Other assets                                                      52,372           44,301
                                                               -----------      -----------

        Total assets                                           $ 1,403,167      $ 1,221,574
                                                               ===========      ===========

LIABILITIES
  Line of credit                                               $        --      $    99,000
  Debt                                                           1,078,442          674,328
  Other liabilities                                                 31,936           24,833
                                                               -----------      -----------

        Total liabilities                                        1,110,378          798,161
                                                               -----------      -----------

Minority interests                                                  81,043           96,803
                                                               -----------      -----------

STOCKHOLDERS' EQUITY
  Preferred stock, $.01 par value, 10,000 shares
    authorized, none issued                                             --               --
  Common stock, $.01 par value, 100,000 shares
    authorized, 19,626 and 19,192 issued
    in 2004 and 2003, respectively                                     196              192
  Paid-in capital                                                  462,522          446,211
  Officer's notes                                                   (9,798)         (10,299)
  Unearned compensation                                            (15,557)          (7,337)
  Accumulated comprehensive earnings                                  (959)          (1,294)
  Distributions in excess of accumulated earnings                 (181,073)         (94,479)
  Treasury stock, at cost, 1,202 and 202 shares
    in 2004 and 2003, respectively                                 (43,585)          (6,384)
                                                               -----------      -----------

        Total stockholders' equity                                 211,746          326,610
                                                               -----------      -----------

        Total liabilities and stockholders' equity             $ 1,403,167      $ 1,221,574
                                                               ===========      ===========




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

                                      F-7



                             SUN COMMUNITIES, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
                (AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)



                                                                 2004               2003                2002
                                                              ---------           ---------          ---------
                                                                                            
REVENUES
Income from rental property                                   $ 167,835           $ 159,115          $ 149,875
Revenues from home sales                                         17,837              19,516                 --
Ancillary revenues, net                                           1,735               1,791                 --
Interest                                                          6,633               7,434              6,169
Income from Origen, net, principally interest                        --               3,920              1,821
Gain on sale of land                                              5,879                  --                 --
Other income                                                        934                 676              2,304
                                                              ---------           ---------          ---------
    Total revenues                                              200,853             192,452            160,169

COSTS AND EXPENSES
Property operating and maintenance                               41,819              39,837             33,751
Cost of home sales                                               14,383              13,879                 --
Real estate taxes                                                13,817              11,746             10,217
General and administrative - rental property                     12,559              10,536              7,722
General and administrative - home sales                           8,080               6,027                 --
Depreciation and amortization                                    45,395              44,120             37,900
Interest                                                         48,243              38,738             32,375
Extinguishment of debt                                           51,643                  --                 --
Deferred financing costs related to extinguished debt             5,557                  --                 --
Impairment charge                                                    --               4,932                 --
Florida storm damage                                                600                  --                 --
                                                              ---------           ---------          ---------
    Total expenses                                              242,096             169,815            121,965

Equity income (loss) from affiliates                              (151)                667            (16,627)
                                                              ---------           ---------          ---------
      Income (loss) from operations                             (41,394)             23,304             21,577

Less income (loss) allocated to minority interest:
  Preferred OP Units                                              4,438               6,479              7,803
  Common OP Units                                                (5,364)              3,083              1,802
                                                              ---------           ---------          ---------

Income (loss) from continuing operations                       (40,468)             13,742             11,972
Income from discontinued operations                                 --               9,972              1,620
                                                              ---------           ---------          ---------
      Net income (loss)                                       $ (40,468)          $  23,714          $  13,592
                                                              =========           =========          =========

Weighted average common shares outstanding:
  Basic                                                          18,318              18,206             17,595
                                                              =========           =========          =========
  Diluted                                                        18,318              18,345             17,781
                                                              =========           =========          =========
Basic earnings (loss) per share:
  Continuing operations                                       $   (2.21)          $    0.75          $    0.68
  Discontinued operations                                            --                0.55               0.09
                                                              ---------           ---------          ---------
  Net income (loss)                                           $   (2.21)          $    1.30          $    0.77
                                                              =========           =========          =========
Diluted earnings (loss) per share:
  Continuing operations                                       $   (2.21)          $    0.75          $    0.67
  Discontinued operations                                            --                0.54               0.09
                                                              ---------           ---------          ---------
  Net income (loss)                                           $   (2.21)          $    1.29          $    0.76
                                                              =========           =========          =========


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

                                      F-8



                              SUN COMMUNITIES, INC.
             CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
                (AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)



                                                         2004         2003         2002
                                                       --------     --------     --------

                                                                        
Net income (loss)                                      $(40,468)    $ 23,714     $ 13,592
Unrealized income (loss) on interest rate swaps             335          557       (1,851)
                                                       --------     --------     --------
Comprehensive income (loss)                            $(40,133)    $ 24,271     $ 11,741
                                                       ========     ========     ========





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

                                      F-9



                              SUN COMMUNITIES, INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
                (AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE DATA)



                                                                       ACCUMULATED  DISTRIBUTIONS
                                                                         OTHER       IN EXCESS OF
                                   COMMON     PAID-IN     UNEARNED    COMPREHENSIVE  ACCUMULATED   TREASURY    OFFICERS'     TOTAL
                                   STOCK      CAPITAL   COMPENSATION     LOSS          EARNINGS     STOCK        NOTES      EQUITY
                                  --------   --------   ------------  ------------- -------------  --------    --------    --------
                                                                                                   
Balance, January 1, 2002          $    178   $399,789     $ (6,999)     $    --      $ (45,939)    $ (6,384)   $(11,004)   $329,641
Issuance of common stock, net            5     17,406       (2,767)                                                          14,644
Amortization                                                 1,144                                                            1,144
Repayment of officers' notes                                                                                        301         301
Reclassification and conversion
   of minority interest                                      3,488                                                            3,488
Net income                                                                              13,592                               13,592
Unrealized loss on interest
   rate swaps                                                            (1,851)                                             (1,851)
Cash distributions declared of
   $2.29 per share                                                                     (41,427)                             (41,427)
                                  --------   --------     --------      -------      ---------     --------    --------    --------
Balance, December 31, 2002             183    420,683       (8,622)      (1,851)       (73,774)      (6,384)    (10,703)   $319,532
Issuance of common stock, net            9     27,640                                                                        27,649
Amortization                                                 1,285                                                            1,285
Repayment of officers' notes                                                                                        404         404
Reclassification and conversion
   of minority interest                        (2,112)                                                                       (2,112)
Net income                                                                              23,714                               23,714
Unrealized income on interest
   rate swaps                                                               557                                                 557
Cash distributions declared of
   $2.41 per share                                                                     (44,419)                             (44,419)
                                  --------   --------     --------      -------      ---------     --------    --------    --------
Balance, December 31, 2003             192    446,211       (7,337)      (1,294)       (94,479)      (6,384)    (10,299)   $326,610
Issuance of common stock, net            4     13,455      (10,331)                                                           3,128
Amortization                                                 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     $(15,557)     $  (959)     $(181,073)    $(43,585)   $ (9,798)   $211,746
                                  ========   ========     ========      =======      =========     ========    ========    ========


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

                                      F-10


                              SUN COMMUNITIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
                             (AMOUNTS IN THOUSANDS)



                                                                                                 2004          2003          2002
                                                                                              ---------     ---------     ---------
                                                                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                                                             $ (40,468)    $  23,714     $  13,592
 Adjustments to reconcile net income (loss) to cash provided by operating activities:
  Income (loss) allocated to minority interests                                                  (5,364)        3,083         1,802
  Income from discontinued operations allocated to minority interests                                --           191           243
  Gain from property and land dispositions, net                                                  (5,879)       (3,658)         (361)
  Depreciation and amortization                                                                  49,510        44,120        37,900
  Depreciation allocated to income from discontinued operations                                      --           347           675
  Amortization of deferred financing costs                                                        2,160         1,835         1,231
  Reduction in book value of investments                                                             --            --        13,881
  Extinguishment of debt                                                                         51,643            --            --
  Write off of deferred financing costs related to extinguished debt                              5,557            --            --
  Equity (income) loss from affiliates                                                              151          (667)       16,627
  Increase in inventory and other assets                                                         (6,591)       (5,550)      (15,973)
  Increase (decrease) in accounts payable and other liabilities                                   7,103          (814)       (2,031)
                                                                                              ---------     ---------     ---------
                 Net cash provided by operating activities                                       57,822        62,601        67,586
                                                                                              ---------     ---------     ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Investment in rental properties                                                              (147,965)      (50,310)      (87,283)
  Purchase of short-term investments                                                           (106,975)           --            --
  Proceeds from sales of short-term investments                                                  62,000            --            --
  Proceeds related to property and land dispositions                                              8,257        22,499         3,288
  Distributions from (investment in and advances to) affiliates                                   2,238       (46,945)      (68,409)
  Proceeds from sale of installment loans on manufactured homes to Origen                        13,289        61,994            --
  Purchase of installment loans on manufactured homes from Origen                                    --       (74,206)           --
  Decrease (increase) in notes receivable and officers' notes, net                               17,003        28,747       (33,096)
                                                                                              ---------     ---------     ---------
                 Net cash used in investing activities                                         (152,153)      (58,221)     (185,500)
                                                                                              ---------     ---------     ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from issuance of common stock and OP units, net                                    1,033        26,222        13,801
  Borrowings (repayments) on line of credit, net                                                (99,000)       36,000       (30,000)
  Payments to redeem notes payable and other debt                                              (426,224)     (143,774)      (18,488)
  Proceeds from notes payable and other debt                                                    744,462       150,000       200,363
  Payments for deferred financing costs                                                          (9,091)       (2,281)       (2,914)
  Treasury stock purchases                                                                      (37,201)           --            --
  Distributions                                                                                 (51,120)      (49,153)      (46,771)
                                                                                              ---------     ---------     ---------
                 Net cash provided by financing activities                                      122,859        17,014       115,991
                                                                                              ---------     ---------     ---------

 Net increase (decrease) in cash and cash equivalents                                            28,528        21,394        (1,923)

 Cash and cash equivalents, beginning of period                                                  24,058         2,664         4,587
                                                                                              ---------     ---------     ---------

 Cash and cash equivalents, end of period                                                     $  52,586     $  24,058     $   2,664
                                                                                              =========     =========     =========
SUPPLEMENTAL INFORMATION:
Cash paid for interest including capitalized amounts of $380, $2,082 and $2,915
  in 2004, 2003 and 2002, respectively                                                        $  50,413     $  37,802     $  34,830
Noncash investing and financing activities:
  Debt assumed for rental properties                                                          $  34,186     $   2,288     $  20,653
  Issuance of partnership units for rental properties                                                --            --     $   4,500
  Issuance of partnership units to retire capitalized lease obligations                       $   4,725     $   4,170     $   5,520
  Unrealized gains (losses) on interest rate swaps                                            $     335     $     557     $  (1,851)


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

                                      F-11




                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

   a.  BUSINESS: Sun Communities, Inc. (the "Company") is a real estate
       investment trust ("REIT") which owns and operates 136 manufactured
       housing communities at December 31, 2004 located in eighteen states
       concentrated principally in the Midwest and Southeast comprising
       approximately 46,856 developed sites and approximately 7,277 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.

   b.  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 effective
       December 31, 2003, Sun Home Services, Inc. ("SHS"). SHS is consolidated
       beginning in 2003 in accordance with Financial Interpretation No. 46(R),
       "Consolidation of Variable Interest Entities". The Company owns 100
       percent of the outstanding capital stock of SHS. With total assets of
       approximately $92.2 million, SHS actively markets, sells and leases new
       and pre-owned manufactured homes for placement in the Company's
       properties. SHS has a floorplan line of credit of approximately $8.5
       million which is collateralized by $8.5 million of new homes held in
       inventory and which is guaranteed by the Company.

       The minority interests include 2.5 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.

       Included in minority interests at December 31, 2004 and 2003 are 2
       million Series A Perpetual Preferred OP Units ("PPOP Units") issued at
       $25 per unit in September 1999 bearing an annual coupon rate of 8.875
       percent. The PPOP Units may be called under certain conditions by the
       Company at par on or after September 29, 2004, have no stated maturity or
       mandatory redemption and are convertible into preferred stock under
       certain circumstances. The Company has issued the required notice to
       retire these PPOP Units in the first quarter of 2005.

       $62.1 million and $58.1 million of Preferred OP Units ("POP Units"),
       which are mandatorily redeemable, are included in debt at December 31,
       2004 and 2003, respectively, pursuant to the adoption of Statement of
       Financial Accounting Standards No. 150, "Accounting for Certain Financial
       Instruments with Characteristics of both Liability



                                      F-12


                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

   b.  PRINCIPLES OF CONSOLIDATION, CONTINUED:
       and Equity". These POP Units pay dividends at rates ranging from 6.0
       percent to 7.6 percent and mature between 2006 and 2014. Of these POP
       Units, $43.8 million are convertible into shares of the Company's common
       stock or OP Units at conversion prices ranging from $44 to $68 per unit.
       The maximum amount that the Company is required to pay to redeem its POP
       Units is $62.1 million and, if converted, approximately 707,000 shares of
       the Company's capital stock or OP Units would be issued.

       Of the $62.1 million POP Units included in debt at December 31, 2004,
       $4.7 and $4.2 million were issued during 2004 and 2003, respectively, in
       connection with property acquisitions. These POP Units pay dividends at
       7.625% and mature on May 15, 2010.

   c.  RENTAL PROPERTY: Rental property is recorded at cost, less accumulated
       depreciation. The Company measures the recoverability of its assets in
       accordance with the 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, the impairment that would be recognized is measured by the
       amount by which the carrying amount of the asset exceeds the fair value
       of the asset as determined on a discounted net cash flow basis. Assets
       are tested for impairment 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 for the sale of one 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.

       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 and 7 to 15 years for furniture, fixtures and
       equipment.



                                      F-13


                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

   d.  CASH AND CASH EQUIVALENTS: The Company considers all highly liquid
       investments with an initial maturity of three months or less to be cash
       and cash equivalents.

   e.  SHORT-TERM INVESTMENTS: The Company's short-term investments consist of
       investments in auction rate securities with contractual maturities of up
       to 30 years. These auction rate securities have interest re-set dates
       that occur every 7 to 28 days and can be actively marketed at ongoing
       auctions that occur every 7 to 28 days. Auction rate securities are
       classified as available-for-sale and are reported on the balance sheet at
       par value, which approximates market value. Consequently, interest rate
       movements do not affect the balance sheet valuation of these investments.

   f.  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 collectibility of 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. The reserve for uncollectible accounts
       receivable from residents was $0.15 million at December 31, 2004 and
       2003.

   g.  STOCK OPTIONS: The company accounts for its stock options using the
       intrinsic value method contained in APB Opinion No. 25. "Accounting for
       Stock Issued to Employees." If the Company had accounted for awards using
       the method contained in FASB Statement No. 123, "Accounting for
       Stock-Based Compensation", net income (loss) and earnings (loss) per
       share would have been presented as follows for the years ended December
       31, 2004, 2003 and 2002 (amounts in thousands, except for per share
       data):



                                                               2004         2003         2002
                                                             --------      -------      -------
                                                                               
Net income (loss), as reported                               $(40,468)     $23,714      $13,592
Stock-based compensation expense under fair value method          (62)        (274)        (478)
                                                             --------      -------      -------
Pro forma net income (loss)                                  $(40,530)     $23,440      $13,114
                                                             ========      =======      =======

Earnings (loss) per share (Basic), as reported               $  (2.21)     $  1.30      $  0.77
                                                             ========      =======      =======
Earnings (loss) per share (Basic), pro forma                 $  (2.21)     $  1.29      $  0.75
                                                             ========      =======      =======

Earnings (loss) per share (Diluted), as reported             $  (2.21)     $  1.29      $  0.76
                                                             ========      =======      =======
Earnings (loss) per share (Diluted), pro forma               $  (2.21)     $  1.28      $  0.74
                                                             ========      =======      =======



                                      F-14

                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

   h.  INVESTMENTS IN AND ADVANCES TO AFFILIATES: During the period from
       December 2001 to October 2003, the Company owned approximately a thirty
       percent equity interest in Origen Financial L.L.C., a company engaged in
       the business of originating, acquiring and servicing manufactured home
       loans. The Company wrote-off its $13.6 million investment in Origen
       Financial L.L.C. at December 31, 2002 because of severely deteriorated
       industry conditions marked by the bankruptcies of two competing
       manufactured home lenders, the closure of the securitization marketplace,
       and the resultant liquidity squeeze impacting Origen Financial L.L.C.

       In October 2003, Origen Financial, Inc. ("Origen"), a real estate
       investment trust, was formed to be the sole member of Origen Financial
       L.L.C. In connection with the formation and capitalization of Origen, all
       of the members of Origen Financial L.L.C., including the Company,
       contributed all of their respective membership interests and warrants to
       purchase membership interests in Origen Financial L.L.C. to Origen. None
       of the members of Origen Financial L.L.C. (including the Company)
       received any monetary consideration or shares of common stock in Origen
       in exchange for their contributed membership interests and warrants in
       Origen Financial, L.L.C.

       In addition, in October 2003, the Company purchased 5,000,000 shares of
       common stock of Origen for $50 million and other investors contributed
       $100 million to Origen, resulting in an initial $150 million
       capitalization of Origen. The Company determined that this investment was
       reasonable and prudent because it resulted in a stabilized and
       well-financed Origen, allowing Origen to finance its operations from
       traditional sources of warehouse financing and access to the
       securitization marketplace. This investment occurred at a time that the
       Company believed the manufactured home finance industry was beginning to
       rebound as interest rates stabilized, the two bankrupt manufactured home
       lenders were emerging from bankruptcy and new entrants dedicated to
       financing manufactured homes buoyed the industry.

       Origen has raised approximately an additional $80 million since October
       2003 and is now a public company with demonstrated access to the capital
       markets. As of December 31, 2004, 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 Company's
       investment in Origen has a market value of $37.4 million at December 31,
       2004 and is accounted for using the equity method of accounting. During
       the year the Company received $2.2 million in dividends from Origen.
       Management has no plans to dispose of this investment in the foreseeable
       future and believes the difference between the carrying value of Origen
       is not other than temporary.


                                      F-15


                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

   h.  INVESTMENTS IN AND ADVANCES TO AFFILIATES, CONTINUED:
       Summarized combined financial information of Origen at December 31, 2004
       and 2003 and Origen Financial L.L.C. and SHS at December 31, 2002 is
       presented below before elimination of intercompany transactions. Also
       presented is summarized financial information for Origen Financial L.L.C.
       for the period January 1, 2003 to October 7, 2003. This is presented for
       informational purposes as the company wrote off its investment in Origen
       Financial L.L.C. in December of 2002. SHS was consolidated in the
       Company's financial statements as of December 31, 2003.



                                            ORIGEN
                                             2004    ORIGEN FINANCIAL LLC       ORIGEN        ORIGEN FINANCIAL LLC     SHS
                                         (Unaudited)   01/01/03-10/07/03    10/08/03-12/31/03         2002            2002
                                         ----------- --------------------  -----------------  --------------------  ---------
                                                                                                     
Loans receivable, net                     $ 564,931        $ 279,300           $ 368,509           $ 173,764        $  33,560
Other assets                                119,279           47,903              76,033              53,984           41,220
                                          ---------        ---------           ---------           ---------        ---------
          Total assets                    $ 684,210        $ 327,203           $ 444,542           $ 227,748        $  74,780
                                          =========        =========           =========           =========        =========

Notes payable                             $ 435,761        $ 273,186           $ 277,441           $  54,946        $  85,361
Advances under repurchase agreements         20,153               --                  --             141,085               --
Other liabilities                            23,167           22,345              24,312              21,413            8,634
                                          ---------        ---------           ---------           ---------        ---------
          Total liabilities                 479,081          295,531             301,753             217,444           93,995
                                          ---------        ---------           ---------           ---------        ---------
Preferred interests in subsidiary                --           45,617                  --                  --               --
Equity (deficit)                            205,129          (13,945)            142,789              10,304          (19,215)
                                          ---------        ---------           ---------           ---------        ---------
          Total liabilities and equity    $ 684,210        $ 327,203           $ 444,542           $ 227,748        $  74,780
                                          =========        =========           =========           =========        =========

Revenues                                  $  54,782        $  23,755           $  10,657           $  20,385        $  22,516
Expenses                                     56,554           47,683               8,691              49,572           24,704
Loss from equity investee                        --               --                  --                  --          (15,295)
                                          ---------        ---------           ---------           ---------        ---------
Net income (loss)                         $  (1,772)       $ (23,928)          $   1,966           $ (29,187)       $ (17,483)
                                          =========        =========           =========           =========        =========
Sun's equity income (loss)                $    (151)       $      --           $     667           $      --        $ (16,627)
                                          =========        =========           =========           =========        =========


                                      F-16


                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

   i.  REVENUE RECOGNITION: Rental income attributable to 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. The Company offers, through its Home Buying Made Easy
       program, retail installment contracts at interest rates of 4.99 to 7.99
       percent to qualified buyers of homes within its communities. Currently,
       the Company holds 202 loans under this program totaling $6.6 million. The
       Company amortizes the interest discount from current market rates related
       to this program into income over the term of the note. The Company also
       bifurcates the discounted present value of the interest differential
       between the home sale and the anticipated rental revenue as required by
       Emerging Issues Task Force 00-21 "Revenue Arrangements with Multiple
       Deliverables". The differential allocated to the home sale is recognized
       as a reduction of revenue from the sale of the home and the differential
       allocated to future rental revenue is amortized as rental discount over
       the term of the loan.

   j.  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.

   k.  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 $23.6 million and $28.0
       million at December 31, 2004 and 2003, respectively. Potential expenses
       that would be incurred in an actual sale or settlement are not taken into
       consideration.

   l.  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



                                      F-17


                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

   l.  DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, CONTINUED: 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 FNMA.
       One swap matures in July 2009, with an effective fixed rate of 4.93
       percent. A second swap matures in July 2012, with an effective fixed rate
       of 5.37 percent. The third swap matures in July 2007, with an effective
       fixed rate of 3.97 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 9.49 percent, a notional amount of $152.4 million and a termination
       date of April 03, 2006. Each of the Company's derivative contracts is
       based upon 90-day LIBOR.

       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 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 for the year ended December 31, 2004
       and 2003 totals negative $0.5 million and positive $0.9 million,
       respectively.

       In accordance with SFAS No. 133, the "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 a liability of $1.1 and $0.9 million as of December 31, 2004
       and December 31, 2003, 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.

   m.  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 carryforwards. Deferred tax assets and
       liabilities are measured using currently enacted tax rates. A valuation
       allowance is established if based on the insight of available evidence,
       it is more likely than not that some portion or all of the deferred tax
       assets will not be realized.

   n.  INVENTORY: Inventory of manufactured homes is stated at lower of specific
       cost or market.



                                      F-18


                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:

   o.  RECLASSIFICATIONS: Certain 2003 and 2002 amounts have been reclassified
       to conform to the 2004 financial statement presentation. Such
       reclassifications had no effect on results of operations as originally
       presented.

   p.  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.

2. RENTAL PROPERTY (AMOUNTS IN THOUSANDS):



                                                     AT DECEMBER 31,
                                              -----------------------------
                                                 2004              2003
                                              -----------       -----------
                                                          
         Land                                 $   116,187       $   104,541
         Land improvements and buildings        1,196,671         1,048,576
         Furniture, fixtures, and equipment        35,002            33,080
         Land held for future development          31,652            31,409
         In place leases                            1,988                --
         Property under development                 1,041             2,799
                                              -----------       -----------
                                                1,382,541         1,220,405
         Less accumulated depreciation           (248,668)         (209,921)
                                              -----------       -----------
         Rental property, net                 $ 1,133,873       $ 1,010,484
                                              ===========       ===========


   Land improvements and buildings consist primarily of infrastructure, roads,
   landscaping, clubhouses, rental homes, maintenance buildings and amenities.
   Included in rental property at December 31, 2003 are net carrying amounts
   related to capitalized leases of $9.6 million.

   During 2004, the Company acquired six stabilized communities, comprising
   1,967 developed sites, for $69.4 million consisting of cash of approximately
   $53 million and assumption of debt of approximately $16.4 million and three
   development communities, comprising 989 developed sites and 570 sites
   available for development, for $51.0 million consisting of cash of
   approximately $33.1 million and assumption of debt of approximately $17.9
   million. During 2003, the Company acquired one development community
   comprised of 62 developed sites and 180 sites available for development for
   $4.5 million. These transactions have been accounted for as purchases, and
   the statements of operations include the operations of the acquired
   communities from the dates of their respective acquisitions.

                                      F-19


                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

3. DISPOSITION OF PROPERTIES:

   In 2002, the Company sold one manufactured home community for cash of
   approximately $3.3 million. In 2003 the Company sold four manufactured home
   communities for gross proceeds of approximately $24.8 million. In 2004 the
   Company sold undeveloped commercial land for $8.8 million resulting in a gain
   of approximately $5.9 million.

   In accordance with FAS 144, effective for financial statements issued for all
   fiscal years beginning after December 15, 2001, results of operations and
   gain/(loss) in sales of real estate for properties with identifiable cash
   flows sold subsequent to December 31, 2001 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
                                                ------------------------------
                                                 2004        2003        2002
                                                ------     -------     -------

                                                              
   Income from rental property                  $   --     $ 2,763     $ 3,034
   Property operating and maintenance expenses      --        (533)       (495)
   Real estate taxes                                --        (310)       (361)
   Depreciation and amortization                    --        (347)       (674)
                                                ------     -------     -------
   Income from operations                           --       1,573       1,504
   Income allocated to common OP units              --        (191)       (243)
   Gain on sale of discontinued operations          --       8,590         359
                                                ------     -------     -------
   Income from discontinued operations          $   --     $ 9,972     $ 1,620
                                                ======     =======     =======


                                      F-20

                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

4. NOTES AND OTHER RECEIVABLES (AMOUNTS IN THOUSANDS):



                                                                             AT DECEMBER 31,
                                                                         -----------------------
                                                                           2004            2003
                                                                         -------         -------
                                                                                   
   Mortgage and other notes receivable, with interest payable at a
        weighted average interest rate of 7.49%, maturing at various
        dates through August 2008, substantially collateralized by       $18,499         $41,736
        manufactured home communities
   Installment loans on manufactured homes with interest payable
        monthly at a weighted average interest rate and maturity of
        6.41% and 10 years, respectively                                  16,447          24,802
   Other receivables                                                      10,091           8,290
                                                                         -------         -------
                                                                         $45,037         $74,828
                                                                         =======         =======



   At December 31, 2004, the maturities of mortgage notes and other receivables
   are approximately as follows: 2006 - $3.8 and 2008 - $14.7 million. During
   2004, $13.3 million of the installment loans collateralized by manufactured
   homes were sold at book value (which approximated fair value) to Origen.
   Mortgage and other notes receivable of $24.0 million were repaid during the
   second quarter of 2004.

   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, collateralized by 352,206 shares of
   the Company's common stock and 127,794 OP Units at December 31, 2004 with
   substantial personal recourse. The notes become due in three equal
   installments on each of December 31, 2008, 2009 and 2010. Reductions in the
   principal balance of these notes were $0.5 million and $0.2 million for the
   years 2004 and 2003, respectively.



                                      F-21


                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

5. DEBT AND LINE OF CREDIT (AMOUNTS IN THOUSANDS):

   The following table sets forth certain information regarding debt:



                                                                                        AT DECEMBER 31,
                                                                                ----------------------------
                                                                                   2004              2003
                                                                                ----------        ----------
                                                                                            
   Collateralized term loan, 7.01%, due September 9, 2007                       $   40,837        $   41,547
   Collateralized term loans - CMBS, 4.93-5.32%, due July 1, 2011-2016             496,031                --
   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
        3.58 - 5.2% and 3.24% at December 31, 2004 and December 31, 2003,
        respectively                                                               389,154           152,363
   Preferred OP units, redeemable at various dates through
        January 2, 2014, average interest at 6.79% and 7.0%
        at December 31, 2004 and December 31, 2003, respectively                    62,123            58,148
   Senior notes, 6.77%, due May 14, 2005                                             5,017           350,000
   Capitalized lease obligation, 5.51%, matured in January, 2004                        --             9,606
   Mortgage notes, other                                                            85,280            62,664
                                                                                ----------        ----------
                                                                                $1,078,442        $  674,328
                                                                                ==========        ==========


   The collateralized term loans totaling $926.0 million at December 31, 2004
   are secured by 95 properties comprising approximately 34,339 sites
   representing approximately $678.6 million of net book value. The mortgage
   notes are collateralized by 15 communities comprising approximately 4,965
   sites representing approximately $158.8 million of net book value. A
   capitalized lease obligation matured as of January 1, 2004 and was paid by
   the issuance of 47,250 Preferred OP Units, cash of approximately $1.2 million
   and the assumption of approximately $4.2 million of debt, which was
   immediately retired.

   During 2004 the Company completed financings totaling $734 million consisting
   of Collateralized Mortgaged Back Securities (CMBS) of $496 million and
   additional FNMA financing of $238 million. The Company used approximately
   $440 million of proceeds from these financing transactions to retire existing
   debt. The Company also incurred extinguishment costs of approximately $57
   million in these transactions. Proceeds were also used to acquire communities
   and to repurchase $37 million of the Company's stock.

   Also during 2004, the Company closed on a $115.0 million unsecured revolving
   line of credit bearing interest at LIBOR + 1.75%. At December 31, 2004, $1.3
   million of availability was used to back standby letters of credit and $113.7
   million remains available to be drawn under the facility.

   At December 31, 2004, the total of maturities and amortization of debt during
   the next five years are approximately as follows: 2005 - $20.7 million; 2006
   - $59.0 million; 2007 - $57.3 million; 2008 - $18.3 million, 2009 - $24.0
   million and $899.1 million thereafter.



                                      F-22

                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

6. STOCK OPTIONS:

   Data pertaining to stock option plans are as follows:



                                                2004                2003               2002
                                           --------------      -------------      -------------
                                                                         
   Options outstanding, January 1                810,751             975,767          1,090,794
   Options granted                                52,200                   -              7,500
   Option price                            $34.25-$35.44                 N/A             $34.92
   Options exercised                             155,907             154,179             97,665
   Option price                            $22.00-$34.25       $20.13-$35.39      $20.13-$35.39
   Options forfeited                              10,664              10,837             24,862
   Option price                            $27.03-$34.25       $27.03-$32.75      $27.03-$32.75
   Options outstanding, December 31              696,380 (a)         810,751            975,767
   Option price                            $26.50-$35.44          $20-$35.39         $20-$35.39
   Options exercisable, December 31              663,830 (a)         765,168            834,249


   (a) There are 696,380 and 663,830 options outstanding and exercisable,
       respectively, with exercise prices ranging from $26.50 - $35.44 with a
       weighted average life of 3.5 years related to the outstanding options.
       The weighted average exercise price for these outstanding and exercisable
       options is $30.19 and $29.97, respectively.

   At December 31, 2004, 98,000 shares of common stock were available for the
   granting of options to directors. Directors' options generally vest over a
   three-year period and may be exercised for 10 years after date of grant. In
   addition, the Company established a Long-Term Incentive Plan in 1997 for
   certain employees granting 167,918 options (of which 55,129 remain
   outstanding), which became exercisable in equal installments in 2002-2004.

   The Company has opted to measure compensation cost utilizing the intrinsic
   value method contained in APB Opinion No. 25. "Accounting for Stock Issued to
   Employees.". The fair value of each option grant was estimated as of the date
   of grant with the following assumptions for options granted:



                                                                             2004               2003    2002
                                                                   -----------------------      ----    -----
                                                                   DIRECTORS'   EMPLOYEES'
                                                                   ----------   ----------
                                                                                            
   Estimated fair value per share of options granted during year:   $  3.64 (2)   $ 2.49 (2)     N/A    $ 4.42 (1)

   Assumptions:
   Annualized dividend yield                                           6.8%         6.8%         N/A      5.9%
   Common stock price volatility                                     16.97% (3)    16.5% (5)     N/A     16.4%
   Risk-free rate of return                                           4.33% (4)    3.18% (6)     N/A      5.3%
   Expected option term (in years)                                        7            3         N/A         7


   (1) 2002 based on valuation as of April 2001 using Black-Scholes-Merton
       (closed-form) option-pricing model.
   (2) 2004 based on valuation as of May 2004 using Binomial (lattice)
       option-pricing model.
   (3) Volatility of SUI common stock for the seven years ending May 20, 2004,
       the grant date.
   (4) Yield of ten-year US Treasury bond as of May 20, 2004, the grant date.
   (5) Volatility of SUI common stock for the three years ending May 10, 2004,
       the grant date.
   (6) Yield of seven-year US Treasury bond as of May 10, 2004, the grant date.



                                      F-23

                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

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 of 2004, the Company was authorized to repurchase up to
     1,000,000 shares of its common stock by its Board of Directors. No
     repurchases were made pursuant to this program during the fourth quarter of
     2004.

     In May of 2004, the Company issued 176,650 restricted stock awards at
     $34.25 per share to officers and certain employees which are being
     amortized over their ten year vesting schedule. An additional 125,000
     shares of restricted stock were issued to officers at $34.25 per share, 25
     percent of which vest in three years and 75 percent of which are subject to
     certain performance based criteria. Compensation cost recognized in income
     for all restricted stock awards was $1.9 million, $1.3 million and $1.1
     million in 2004, 2003 and 2002, respectively.

8.   OTHER INCOME (LOSS) (AMOUNTS IN THOUSANDS):

     The components of other income are as follows for the years ended December
     31, 2004, 2003 and 2002:



                                             2004        2003        2002
                                           -------     -------     -------
                                                          
          Development fee                       --          --       1,425
          Brokerage commissions                935         754         834
          Other income (loss)                   (1)        (78)         45
                                           -------     -------     -------
                                           $   934     $   676     $ 2,304
                                           =======     =======     =======


                                      F-24

                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

9.  SEGMENT REPORTING (AMOUNTS IN THOUSANDS):

    The consolidated operations of the Company can be segmented into
    manufactured home sales and property operations segments. Following is a
    presentation of financial information for the years ended December 31, 2004
    and 2003.



                                                                        YEAR ENDED DECEMBER 31, 2004
                                                                -------------------------------------------
                                                                 PROPERTY       MANUFACTURED
                                                                OPERATIONS       HOME SALES       COMBINED
                                                                ----------      -------------     ---------
                                                                                         
Revenues                                                         $ 167,835        $  17,837       $ 185,672
Operating expenses/Cost of sales                                    55,636           14,383          70,019
                                                                 ---------        ---------       ---------
      Net operating income (1)/Gross profit                        112,199            3,454         115,653
Adjustments to arrive at net income (loss):
  Other revenues                                                     7,084            8,097          15,181
  General and administrative                                       (12,559)          (8,080)        (20,639)
  Depreciation and amortization                                    (43,923)          (1,472)        (45,395)
  Interest expense                                                 (48,074)            (169)        (48,243)
  Debt extinguishment costs                                        (51,643)              --         (51,643)
  Deferred financing costs related to extinguished debt             (5,557)              --          (5,557)
  Florida storm damage                                                (600)              --            (600)
  Equity income (loss) from affiliate                                 (151)              --            (151)
  Loss allocated to minority interest                                  926               --             926
                                                                 ---------        ---------       ---------
      Net income (loss)                                          $ (42,298)       $   1,830       $ (40,468)
                                                                 =========        =========       =========




                                                                        YEAR ENDED DECEMBER 31, 2003
                                                                -------------------------------------------
                                                                 PROPERTY       MANUFACTURED
                                                                OPERATIONS       HOME SALES       COMBINED
                                                                ----------      -------------     ---------
                                                                                         
Revenues                                                         $ 159,115        $  19,516       $ 178,631
Operating expenses                                                  51,583           13,879          65,462
                                                                 ---------        ---------       ---------
      Net operating income (1)/Gross profit                        107,532            5,637         113,169
Adjustments to arrive at net income:
  Other revenues                                                     7,175            6,646          13,821
  General and administrative                                       (10,536)          (6,027)        (16,563)
  Depreciation and amortization                                    (43,165)            (955)        (44,120)
  Interest expense                                                 (38,588)            (150)        (38,738)
  Impairment charge                                                 (4,932)              --          (4,932)
  Equity income from affiliate                                         667               --             667
  Income allocated to minority interest                             (9,562)              --          (9,562)
  Income from discontinued operations                                9,972               --           9,972
                                                                 ---------        ---------       ---------
      Net income                                                 $  18,563        $   5,151       $  23,714
                                                                 =========        =========       =========



(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.



                                      F-25

                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

9.  SEGMENT REPORTING (AMOUNTS IN THOUSANDS), CONTINUED:



SELECTED BALANCE SHEET DATA                             DECEMBER 31, 2004                        DECEMBER 31, 2003
                                               -------------------------------------   ------------------------------------
                                                PROPERTY   MANUFACTURED                 PROPERTY   MANUFACTURED
                                               OPERATIONS   HOME SALES     COMBINED    OPERATIONS   HOME SALES    COMBINED
                                               ----------  ------------   ----------   ----------  ------------  ----------
                                                                                               
Identifiable assets:
  Investment in rental property, net           $1,081,561   $   52,312    $1,133,873   $  980,149   $   30,335   $1,010,484
  Cash and cash equivalents                        98,235         (674)       97,561       24,043           15       24,058
  Inventory of manufactured homes                      --       25,964        25,964           --       17,236       17,236
  Investments in and advances to affiliate         48,360           --        48,360       50,667           --       50,667
  Notes and other receivables                      31,574       13,463        45,037       61,534       13,294       74,828
  Other assets                                     51,201        1,171        52,372       41,613        2,688       44,301
                                               ----------   ----------    ----------   ----------   ----------   ----------
    Total assets                               $1,310,931   $   92,236    $1,403,167   $1,158,006   $   63,568   $1,221,574
                                               ==========   ==========    ==========   ==========   ==========   ==========


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.



                                      F-26


                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

10. INCOME TAXES (AMOUNTS IN THOUSANDS), CONTINUED:

    Dividend payout on taxable income available to common stockholders for the
    years ended December 31, 2004, 2003 and 2002:



                                                               2004        2003        2002
                                                             -------     -------     -------

       Taxable income available to
            common stockholders                              $     0     $     0     $ 6,046
       Less tax gain on disposition of properties                 --          --          --
                                                             -------     -------     -------
       Taxable operating income available to
            common stockholders                              $     0     $     0     $ 6,046
                                                             =======     =======     =======

                                                                            
       Total distributions paid to common stockholders       $46,126     $44,419     $41,427
                                                             =======     =======     =======


    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, 2004, 2003 and 2002, distributions paid per share were
    taxable as follows:



                                  2004                    2003                     2002
                         --------------------     --------------------     --------------------
                         AMOUNT    PERCENTAGE     AMOUNT    PERCENTAGE     AMOUNT    PERCENTAGE
                         ------    ----------     ------    ----------     ------    ----------
                                                                       
Ordinary Income          $   --         0.0%      $ 0.65        27.1%      $ 1.54        67.1%
Return of capital          2.44       100.0%        1.76        72.9%        0.75        32.9%
                         ------       -----       ------       -----       ------       -----
                         $ 2.44       100.0%      $ 2.41       100.0%      $ 2.29       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
    carryforwards of approximately $18.1 million at December 31, 2004. A
    deferred asset of approximately $1.0 million, net of a valuation allowance
    of $5.2 million, is included in other assets in the consolidated balance
    sheet as of December 31, 2004. SHS's losses will begin to expire in 2011
    through 2022 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 $1.0
    million and $0.3 million for the years ending December 31, 2004 and 2003,
    respectively and is included in General and administrative - home sales.



                                      F-27



                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

11.  EARNINGS (LOSS) PER SHARE (AMOUNTS IN THOUSANDS):



                                                             2004                2003               2002
                                                           --------            --------           --------
                                                                                         
Earnings (loss) used for basic and diluted earnings
     (loss) per share computation:

Continuing operations                                      $(40,468)           $ 13,742           $ 11,972
                                                           ========            ========           ========
Discontinued operations                                    $     --            $  9,972           $  1,620
                                                           ========            ========           ========

Total shares used for basic earnings (loss) per share        18,318              18,206             17,595
Dilutive securities:
     Stock options and other                                     --                 139                186
                                                           --------            --------           --------
Total weighted average shares used for diluted
     earnings (loss) per share computation                   18,318              18,345             17,781
                                                           ========            ========           ========


     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 year
     ending December 31, 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:



- --------------------------------------------------------------------------------
                                  NUMBER OF
  CONVERTIBLE SECURITIES         UNITS ISSUED              CONVERSION FEATURES
- --------------------------------------------------------------------------------
                                        
Series A Preferred OP Units       1,325,275   Convertible to common stock at $68
                                              per share/unit. Mandatorily
                                              redeemable on 01/02/2014
- --------------------------------------------------------------------------------
Series B Preferred OP Units          35,637   On each of May 1, 2004, 2005, and
                                              2006, holder may exchange Units
                                              for shares of common stock at
                                              exchange rate of 2.272727 ($44
                                              per share) shares of common stock
                                              for each Series B Preferred Unit.
- --------------------------------------------------------------------------------
Series B-2 Preferred OP Units       100,000   Convertible into Common OP Units
                                              after 01/31/2005 at $45 per share/
                                              unit.
- --------------------------------------------------------------------------------



                                      F-28

                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

12.  QUARTERLY FINANCIAL DATA (UNAUDITED):

     The following unaudited quarterly amounts are in thousands, except for per
     share amounts:



                                                  FIRST       SECOND        THIRD      FOURTH
                                                 QUARTER      QUARTER      QUARTER     QUARTER
                                                 MARCH 31     JUNE 30     SEPT. 30     DEC. 31
                                                 --------     -------     --------     -------
                                                                           
2004
Total revenues                                    $49,561     $ 48,787     $48,128     $54,377
Total expenses                                    $42,372(a)  $102,010(a)  $47,137(a)  $50,577(a)
Net income (loss)                                 $ 5,570     $(47,901)    $   554     $ 1,309
Weighted average common shares outstanding         18,702       18,639      18,100      17,832
Earnings (loss) per common share-basic            $  0.30     $  (2.57)    $  0.03     $  0.07

2003
Total revenues                                    $47,966     $ 48,561     $47,557     $48,368
Total expenses                                    $38,903     $ 41,346     $39,685(a)  $49,881(a)
Net income                                        $ 6,343     $  4,539     $ 6,421     $ 6,411
Weighted average common shares outstanding         17,789       17,902      18,504      18,628
Earnings per common share-basic                   $  0.36     $   0.25     $  0.35     $  0.34


     (a) Certain amounts were reclassified from income (loss) allocated to
         minority interest-Preferred OP Units to Interest expense pursuant to
         the requirements of SFAS 150, and therefore cause the amounts in this
         table to differ from the amounts presented in our previously filed 2004
         Forms 10-Q. Total expenses have increased $1,069, $1,075, $1,082,
         $1,068, $1,028 and $1,030 for the quarters ended March 31, June 30,
         September 30, December 31, 2004 and September 30 and December 31, 2003,
         respectively.

13.  RECENT ACCOUNTING PRONOUNCEMENTS:

     In December 2004, the Financial Accounting Standards Board (FASB) issued
     Share-Based Payment Statement No. 123(R), that addresses the accounting for
     share-based payment transactions in which an enterprise receives employee
     services in exchange for (a) equity instruments of the enterprise or (b)
     liabilities that are based on the fair value of the enterprise's equity
     instruments or that may be settled by the issuance of such equity
     instruments. Under the FASB's statement, all forms of share-based payments
     to employees, including employee stock options, must be treated the same as
     other forms of compensation by recognizing the related cost in the income
     statement. The expense of the award would generally be measured at fair
     value at the grant date. Current accounting guidance requires that the
     expense relating to so-called fixed plan employee stock options only be
     disclosed in the footnotes to the financial statements. The Statement
     eliminates the ability to account for share-based compensation transactions
     using APB Opinion No. 25, Accounting for Stock Issued to Employees for
     options granted after June 15, 2005. We will be required to apply SFAS No.
     123(R) as of the first interim reporting period that begins after June 15,
     2005, and we plan to adopt it using the modified-prospective method,
     effective July 1, 2005. The Company is currently evaluating the impact of
     this standard on its results of operations and financial position.



                                      F-29

                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

14.   CONTINGENCIES:

      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), filed a complaint against the Company, SunChamp LLC,
      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. The current status is
      that the proceedings in North Carolina have been stayed pending final
      determination in Michigan as to whether the dispute should be submitted to
      arbitration.

      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.

15.   RELATED PARTY TRANSACTIONS:

      The Company and its affiliates have entered into the following
      transactions with Origen and its predecessor, Origen Financial, L.L.C.,
      during 2003 and 2004:

         -   Capital Investment in Origen. As described in Note 1, 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 Estate of
             Milton M. Shiffman, Gary A. Shiffman and members of his family),
             acquired 1,025,000 shares of common stock of Origen at $10 per
             share.
         -   Loan Servicing Agreement. Origen Servicing, Inc., a wholly-owned
             subsidiary of Origen, services approximately $16.0 million in
             manufactured home loans for the Company as of December 31, 2004.
             The Company pays Origen Servicing, Inc. an annual servicing fee of
             approximately 1.25 percent of the outstanding principal balance of
             the loans which totaled approximately $0.2 million and $0.2 million
             during 2004 and 2003, respectively.
         -   Board Membership. Gary A. Shiffman, the Chairman and Chief
             Executive Officer of the Company, is a board member of Origen.
         -   Remarketing Alliance Program. The Company had agreed to provide
             Origen certain concessions on manufactured homes that Origen
             repossesses in its communities. These concessions may include rent
             abatement for the first 12 months that a repossessed home, owned by
             Origen, is held for sale and abatement of the commission that the
             Company would earn if it brokers such sale. The Company also abates
             rent for other major lenders who own repossessed homes in its
             communities. The Company may also assist with coordinating the
             refurbishment and marketing of the home. The fair value of these
             abatements amounted to approximately $250,000 and $65,000 during
             2004 and 2003, respectively.




                                      F-30

                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

15.  RELATED PARTY TRANSACTIONS, CONTINUED:

         -   Home Buying Made Easy Program. Certain loans under the Company's
             Home Buying Made Easy (HBME) program are originated and serviced by
             Origen. Loans under this program may, from time to time, be sold to
             Origen. Loans under this program may, from time to time, be sold to
             Origen. As these loans 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.
             HBME loans totaling $1.6 million were sold and interest
             differential of approximately $70,000 paid to Origen, Inc. in 2004.
         -   Preferred Membership Interests. During 2003, the Company purchased
             $20.5 million in preferred membership interests of Origen
             Securitization Company, LLC as an interim financing measure until
             Origen's securitization financing arrangement with Citigroup could
             be finalized. The investment was recorded at cost which
             approximated market value, earned an 11% distribution preference
             and was redeemed on October 8, 2003. No gain or loss was recorded
             on the transaction.
         -   Master Loan Purchase Agreement. In June 2003, the Company and
             Origen Financial, L.L.C. entered into a master loan purchase
             agreement under which the Company from time to time could purchase
             from Origen Financial L.L.C. manufactured home loans at a purchase
             price equal to the book value of the loans (the "Sun Purchase
             Price"), plus accrued and unpaid interest. During 2003, the Company
             purchased approximately $74.2 million of manufactured home loans
             from Origen Financial, L.L.C. under the master loan purchase
             agreement. The loans were subsequently sold back to Origen
             Financial, L.L.C. at 100.10% of the Sun Purchase Price plus accrued
             and unpaid interest on the loans. Both the purchase and the sale
             were made at book value, which approximated fair market value, and
             no gain or loss was recorded on the transactions. These
             transactions were interim financing transactions and the master
             loan purchase agreement was terminated in October of 2003.

      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. Rent paid during 2004 and 2003 was approximately
             $52,000 per month.
         -   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
             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.



                                      F-31

                              SUN COMMUNITIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2004, 2003 AND 2002

16.   SUBSEQUENT EVENTS:

      The Company issued the required notice to retire $50 million of PPOP Units
      in the first quarter of 2005.

      In March 2005, the Company acquired a property located near Tampa, FL for
      approximately $7.3 million comprised of 697 recreational vehicle sites and
      31 manufactured home sites.



                                      F-32


SUN COMMUNITIES, INC.                                               SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31. 2004
(AMOUNT IN THOUSANDS)



                                                                                                    COST CAPITALIZED SUBSEQUENT
                                                                        INITIAL COST TO COMPANY     TO ACQUISITION IMPROVEMENTS
                                                                       --------------------------   ---------------------------


     PROPERTY NAME                LOCATION           ENCUMBRANCE          LAND          B & F          LAND          B & F
- -------------------------   ---------------------   ---------------    -----------   ------------    ----------    -----------
                                                                                                     
Academy/Westpoint           Canton, MI                    A                 1,485         14,278             -            212
Allendale                   Allendale, MI                 A                   366          3,684             -          3,895
Alpine                      Grand Rapids, MI              D                   729          6,692             -          3,768
Apple Creek                 Amelia, OH                    C                   543          5,480             -            267
Arbor Terrace               Brandenton, FL                D                   456          4,410             -            562
Ariana Village              Lakeland, FL                  D                   240          2,195             -            616
Autumn Ridge                Ankeny, IO                    A                   890          8,054             -            897
Bedford Hills               Battle Creek, MI              B                 1,265         11,562             -            561
Bell Crossing               Clarksville, TN               -                   717          1,916             -          3,749
Bonita Lake                 Bonita Springs, FL            D                   285          2,641             -            340
Boulder Ridge               Pflugerville, TX              A                 1,000            500         3,324         17,138
Branch Creek                Austin, TX                    A                   796          3,716             -          5,419
Brentwood                   Kentwood, MI                  D                   385          3,592             -            340
Brookside Village           Goshen, IN                    A                   260          1,080           386          7,554
Buttonwood Bay              Sebring, FL                   D                 1,952         18,294             -          2,384
Byrne Hill Village          Toledo, OH                    D                   383          3,903             -            507
Byron Center                Byron Center, MI              D                   253          2,402             -            209
Candlelight Village         Chicago Heights, IL           D                   600          5,623             -            905
Candlewick Court            Owosso, MI                    D                   125          1,900           132          1,190
Carrington Pointe           Ft. Wayne, IN                 A                 1,076          3,632             -          4,480
Casa Del Valle              Alamo, TX                     D                   246          2,316             -            574
Catalina                    Middletown, OH                D                   653          5,858             -          1,456
Cave Creek                  Evans, CO                   8,331               2,241         15,343             -          1,857
Chisholm Point              Pflugerville, TX              A                   609          5,286             -          2,955
Clearwater Village          South Bend, IN                A                    80          1,270            61          1,960
Cobus Green                 Elkhart, IN                   -                   762          7,037             -            805
College Park Estates        Canton, MI                    -                    75            800           174          4,910
Comal Farms                 New Braunfels, TX             -                 1,455          1,732             -          4,511
Continental Estates         Davison, MI                   D                 1,625         16,581           150          1,917
Continental North (1)       Davison, MI                   D                       (1)             (1)        -          3,918
Country Acres               Cadillac, MI                  D                   380          3,495             -            412
Country Meadows             Flat Rock, MI                 A                   924          7,583           296         10,082
Countryside Atlanta         Lawrenceville, GA           3,355               1,274         11,475             -              -
Countryside Gwinnett        Buford, GA                  4,793               1,124         10,117             -              -
Countryside Lake Lanier     Buford, GA                  8,148               1,916         17,249             -              -
Countryside Village         Perry, MI                     B                   275          3,920           185          2,238
Creekside                   Reidsville, NC                -                   350          1,423             -          3,085
Creekwood Meadows           Burton, MI                    D                   808          2,043           404          6,676
Cutler Estates              Grand Rapids, MI              B                   749          6,941             -            491
Davison East (1)            Davison, MI                   D                       (1)             (1)        -             77


                                    GROSS AMOUNT CARRIED AT
                                       DECEMBER 31, 2004
                            -------------------------------------------
                                                                                                   DATE OF
                                                                               ACCUMULATED      CONSTRUCTION (C)
     PROPERTY NAME             LAND          B & F            TOTAL           DEPRECIATION       ACQUISITION (A)
- -------------------------   -----------   -------------    ------------    -----------------    ----------------
                                                                                     
Academy/Westpoint                1,485          14,711          16,196               2,195          2000(A)
Allendale                          366           7,579           7,945               1,921          1996(A)
Alpine                             729          10,460          11,189               2,602          1996(A)
Apple Creek                        543           5,747           6,290               1,006          1999(A)
Arbor Terrace                      456           4,972           5,428               1,387          1996(A)
Ariana Village                     240           2,811           3,051                 934          1994(A)
Autumn Ridge                       890           8,951           9,841               2,403          1996(A)
Bedford Hills                    1,265          12,123          13,388               3,431          1996(A)
Bell Crossing                      717           5,665           6,382                 812          1999(A)
Bonita Lake                        285           2,981           3,266                 829          1996(A)
Boulder Ridge                    4,324          17,638          21,962               2,825          1998(C)
Branch Creek                       796           9,135           9,931               2,362          1995(A)
Brentwood                          385           3,932           4,317               1,134          1996(A)
Brookside Village                  646           8,634           9,280               2,419          1985(A)
Buttonwood Bay                   1,952          20,678          22,630               2,331          2001(A)
Byrne Hill Village                 383           4,410           4,793                 806          1999(A)
Byron Center                       253           2,611           2,864                 745          1996(A)
Candlelight Village                600           6,528           7,128               1,809          1996(A)
Candlewick Court                   257           3,090           3,347               1,070          1985(A)
Carrington Pointe                1,076           8,112           9,188               1,708          1997(A)
Casa Del Valle                     246           2,890           3,136                 765          1997(A)
Catalina                           653           7,314           7,967               2,495          1993(A)
Cave Creek                       2,241          17,200          19,441                 270          2004(A)
Chisholm Point                     609           8,241           8,850               2,251          1995(A)
Clearwater Village                 141           3,230           3,371               1,020          1986(A)
Cobus Green                        762           7,842           8,604               2,843          1993(A)
College Park Estates               249           5,710           5,959               1,879          1978(A)
Comal Farms                      1,455           6,243           7,698                 666         2000(A&C)
Continental Estates              1,775          18,498          20,273               4,778          1996(A)
Continental North (1)                -           3,918           3,918               1,131          1996(A)
Country Acres                      380           3,907           4,287               1,081          1996(A)
Country Meadows                  1,220          17,665          18,885               5,048          1994(A)
Countryside Atlanta              1,274          11,475          12,749                 209          2004(A)
Countryside Gwinnett             1,124          10,117          11,241                 190          2004(A)
Countryside Lake Lanier          1,916          17,249          19,165                 315          2004(A)
Countryside Village                460           6,158           6,618               2,056          1987(A)
Creekside                          350           4,508           4,858                 525         2000(A&C)
Creekwood Meadows                1,212           8,719           9,931               1,824          1997(C)
Cutler Estates                     749           7,432           8,181               2,083          1996(A)
Davison East (1)                     -              77              77                   3          1996(A)



                                      F-33


SUN COMMUNITIES, INC.                                               SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31. 2004
(AMOUNT IN THOUSANDS)



                                                                                                    COST CAPITALIZED SUBSEQUENT
                                                                        INITIAL COST TO COMPANY     TO ACQUISITION IMPROVEMENTS
                                                                       --------------------------   ---------------------------


     PROPERTY NAME                LOCATION           ENCUMBRANCE          LAND          B & F          LAND          B & F
- -------------------------   ---------------------   ---------------    -----------   ------------    ----------    -----------
                                                                                                     
Deerfield Run               Anderson, MI                1,700                 990          1,607             -          3,367
Desert View Village         West Wendover, NV             -                 1,119              -             -          1,708
Eagle Crest                 Firestone, CO                 A                 2,015            150             -         26,217
East Fork                   Batavia, OH                   -                 1,280          6,302             -          4,675
Edwardsville                Edwardsville, KS              B                   425          8,805           541          2,923
Falcon Pointe               East Lansing, MI            2,288                 450          4,049             -            698
Fisherman's Cove            Flint, MI                     D                   380          3,438             -            662
Forest Meadows              Philomath, OR                 D                 1,031          2,050             -            261
Four Seasons                Elkhart, IN                   D                   500          4,811             -             57
Glen Laurel                 Concord, NC                   -                 1,641            453             -          6,887
Goldcoaster                 Homestead, FL                 D                   446          4,234           172          2,025
Grand                       Grand Rapids, MI              D                   374          3,587             -            274
Groves                      Ft. Myers, FL                 D                   249          2,396             -            801
Hamlin                      Webberville, MI               D                   125          1,675           536          4,391
High Point                  Frederika, DE                 -                   898          7,031             -          1,235
Holiday Village             Elkhart, IN                   A                   100          3,207           143          1,296
Holly / Hawaiian Gardens    Holly, MI                     D                 1,514         13,596             -              -
Holly Forest                Holly Hill, FL                A                   920          8,376             -            445
Hunters Glen                Wayland, MI                 5,301               1,102         11,926             -              -
Indian Creek                Ft. Myers Beach, FL           D                 3,832         34,660             -          2,358
Island Lake                 Merritt Island, FL            D                   700          6,431             -            389
Kensington Meadows          Lansing, MI                   A                   250          2,699             -          3,694
Kenwood                     La Feria, TX                  -                   145          1,842             -             87
King's Court                Traverse City, MI             A                 1,473         13,782             -          1,712
King's Lake                 Debary, FL                    D                   280          2,542             -          2,313
Knollwood Estates           Allendale, MI               2,611                 400          4,061             -             36
Lafayette Place             Warren, MI                    D                   669          5,979             -            962
Lake Juliana                Auburndale, FL                D                   335          2,848             -          1,126
Lake San Marino             Naples, FL                    D                   650          5,760             -            642
Lakeview                    Ypsilanti, MI                 -                 1,156         10,903             -              -
Leesburg Landing            Leesburg, FL                  -                    50            429           921            502
Liberty Farms               Valparaiso, IN                D                    66          1,201           116          2,153
Lincoln Estates             Holland, MI                   D                   455          4,201             -            579
Maplewood Mobile            Lawrence, IN                  D                   275          2,122             -          1,125


                                    GROSS AMOUNT CARRIED AT
                                       DECEMBER 31, 2004
                            -------------------------------------------
                                                                                                   DATE OF
                                                                               ACCUMULATED      CONSTRUCTION (C)
     PROPERTY NAME             LAND          B & F            TOTAL           DEPRECIATION       ACQUISITION (A)
- -------------------------   -----------   -------------    ------------    -----------------    ----------------
                                                                                    
Deerfield Run                      990           4,974           5,964                 736          1999(A)
Desert View Village              1,119           1,708           2,827                 673          1998(C)
Eagle Crest                      2,015          26,367          28,382               2,179          1998(C)
East Fork                        1,280          10,977          12,257               1,264         2000(A&C)
Edwardsville                       966          11,728          12,694               3,931          1987(A)
Falcon Pointe                      450           4,747           5,197                 211          2003(A)
Fisherman's Cove                   380           4,100           4,480               1,453          1993(A)
Forest Meadows                   1,031           2,311           3,342                 392          1999(A)
Four Seasons                       500           4,868           5,368                 756          2000(A)
Glen Laurel                      1,641           7,340           8,981                 568         2001(A&C)
Goldcoaster                        618           6,259           6,877               1,493          1997(A)
Grand                              374           3,861           4,235                 987          1996(A)
Groves                             249           3,197           3,446                 841          1997(A)
Hamlin                             661           6,066           6,727               1,067          1984(A)
High Point                         898           8,266           9,164               1,035          1997(A)
Holiday Village                    243           4,503           4,746               1,609          1986(A)
Holly / Hawaiian Gardens         1,514          13,597          15,111                 232          2004(A)
Holly Forest                       920           8,821           9,741               2,214          1997(A)
Hunters Glen                     1,102          11,926          13,028                 262          2004(A)
Indian Creek                     3,832          37,018          40,850              10,518          1996(A)
Island Lake                        700           6,820           7,520               2,160          1995(A)
Kensington Meadows                 250           6,393           6,643               1,696          1995(A)
Kenwood                            145           1,929           2,074                 376          1999(A)
King's Court                     1,473          15,494          16,967               4,349          1996(A)
King's Lake                        280           4,855           5,135               1,448          1994(A)
Knollwood Estates                  400           4,097           4,497                 485          2001(A)
Lafayette Place                    669           6,941           7,610               1,508          1998(A)
Lake Juliana                       335           3,974           4,309               1,254          1994(A)
Lake San Marino                    650           6,402           7,052               1,827          1996(A)
Lakeview                         1,156          10,903          12,059                 192          2004(A)
Leesburg Landing                   971             931           1,902                 247          1996(A)
Liberty Farms                      182           3,354           3,536               1,102          1985(A)
Lincoln Estates                    455           4,780           5,235               1,328          1996(A)
Maplewood Mobile                   275           3,247           3,522               1,073          1989(A)



                                      F-34



SUN COMMUNITIES, INC.                                               SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31. 2004
(AMOUNT IN THOUSANDS)



                                                                                                    COST CAPITALIZED SUBSEQUENT
                                                                        INITIAL COST TO COMPANY     TO ACQUISITION IMPROVEMENTS
                                                                       --------------------------   ---------------------------


     PROPERTY NAME                LOCATION           ENCUMBRANCE          LAND          B & F          LAND          B & F
- -------------------------   ---------------------   ---------------    -----------   ------------    ----------    -----------
                                                                                                     
Meadow Lake Estates         White Lake, MI                A                 1,188         11,498           127          2,039
Meadowbrook                 Charlotte, NC                 -                 1,310          6,570             -         (1,246)
Meadowbrook Estates         Monroe, MI                    D                   431          3,320           379          6,189
Meadowbrook Village         Tampa, FL                     D                   519          4,728             -          4,693
Meadows                     Nappanee, IN                  D                   287          2,300             -          2,638
North Point Estates         Pueblo, CO                    -                 1,582          3,027             1          2,798
Oak Crest                   Austin, TX                    -                 4,311         12,611             -            507
Oakwood Village             Miamisburg, OH                A                 1,964          6,401             -          6,918
Orange Tree                 Orange City, FL               D                   283          2,530            15            836
Orchard Lake                Milford, OH                   C                   395          4,025             -            116
Pebble Creek                Greenwood, IN                 -                 1,030          5,074             -          3,454
Pecan Branch                Georgetown, TX                -                 1,379              -           331          4,387
Pheasant Ridge              Lancaster, PA                 D                 2,044         19,279             -             88
Pin Oak Parc                St. Louis, MO                 A                 1,038          3,250           467          5,007
Pine Hills                  Middlebury, IN                -                    72            544            60          1,827
Pine Ridge                  Petersburg, VA                D                   405          2,397             -          1,429
Pine Trace                  Houston, TX                 8,925               2,907         17,169             -              -
Presidential                Hudsonville, MI               A                   680          6,314             -          1,388
Richmond                    Richmond, MI                  D                   501          2,040             -            502
River Haven                 Grand Haven, MI             9,397               1,800         16,967             -            381
River Ranch                 Austin, TX                    -                 4,690            843             -          7,042
River Ridge                 Austin, TX                    -                 3,201         15,090             -            330
Roxbury                     Goshen, IN                    A                 1,057          9,870             1            196
Royal Country               Miami, FL                     B                 2,290         20,758             -          1,085
Saddle Oak Club             Ocala, FL                     A                   730          6,743             -            856
Saddlebrook                 San Marcos, TX                -                 1,703         11,843             -            529
Scio Farms                  Ann Arbor, MI                 D                 2,300         22,659             -          4,199
Sea Air                     Rehoboth Beach, DE          4,193               1,207         10,179             -          1,074
Sherman Oaks                Jackson, FL                   B                   200          2,400           240          4,181
Siesta Bay                  Ft. Myers Beach, FL           D                 2,051         18,549             -          1,103
Silver Star                 Orlando, FL                   D                 1,022          9,306             -            532
Snow to Sun                 Weslaco, TX                   D                   190          2,143            15          1,011
Southfork                   Belton, MO                    D                 1,000          9,011             -          1,618
St. Clair Place             St. Clair, MI                 D                   501          2,029             -            394


                                    GROSS AMOUNT CARRIED AT
                                       DECEMBER 31, 2004
                            -------------------------------------------
                                                                                                   DATE OF
                                                                               ACCUMULATED      CONSTRUCTION (C)
     PROPERTY NAME             LAND          B & F            TOTAL           DEPRECIATION       ACQUISITION (A)
- -------------------------   -----------   -------------    ------------    -----------------    ----------------
                                                                                    
Meadow Lake Estates              1,315          13,537          14,852               4,919          1994(A)
Meadowbrook                      1,310           5,324           6,634               1,290         2000(A&C)
Meadowbrook Estates                810           9,509          10,319               3,326          1986(A)
Meadowbrook Village                519           9,421           9,940               1,861          1994(A)
Meadows                            287           4,938           5,225               1,600          1987(A)
North Point Estates              1,583           5,825           7,408                 613          2001(C)
Oak Crest                        4,311          13,118          17,429               1,116          2002(A)
Oakwood Village                  1,964          13,319          15,283               2,451          1998(A)
Orange Tree                        298           3,366           3,664               1,096          1994(A)
Orchard Lake                       395           4,141           4,536                 829          1999(A)
Pebble Creek                     1,030           8,528           9,558               1,227         2000(A&C)
Pecan Branch                     1,710           4,387           6,097                 410          1999(C)
Pheasant Ridge                   2,044          19,367          21,411               1,656          2002(A)
Pin Oak Parc                     1,505           8,257           9,762               2,147          1994(A)
Pine Hills                         132           2,371           2,503                 790          1980(A)
Pine Ridge                         405           3,826           4,231               1,305          1986(A)
Pine Trace                       2,907          17,169          20,076                 292          2004(A)
Presidential                       680           7,702           8,382               2,148          1996(A)
Richmond                           501           2,542           3,043                 560          1998(A)
River Haven                      1,800          17,348          19,148               2,113          2001(A)
River Ranch                      4,690           7,885          12,575                 392         2000(A&C)
River Ridge                      3,201          15,420          18,621               1,444          2002(A)
Roxbury                          1,058          10,066          11,124               1,180          2001(A)
Royal Country                    2,290          21,843          24,133               7,976          1994(A)
Saddle Oak Club                    730           7,599           8,329               2,547          1995(A)
Saddlebrook                      1,703          12,372          14,075               1,049          2002(A)
Scio Farms                       2,300          26,858          29,158               8,121          1995(A)
Sea Air                          1,207          11,253          12,460               1,396          1997(A)
Sherman Oaks                       440           6,581           7,021               2,213          1986(A)
Siesta Bay                       2,051          19,652          21,703               5,617          1996(A)
Silver Star                      1,022           9,838          10,860               2,814          1996(A)
Snow to Sun                        205           3,154           3,359                 782          1997(A)
Southfork                        1,000          10,629          11,629               2,269          1997(A)
St. Clair Place                    501           2,423           2,924                 651          1998(A)



                                      F-35



SUN COMMUNITIES, INC.                                               SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31. 2004
(AMOUNT IN THOUSANDS)



                                                                                                    COST CAPITALIZED SUBSEQUENT
                                                                        INITIAL COST TO COMPANY     TO ACQUISITION IMPROVEMENTS
                                                                       --------------------------   ---------------------------


     PROPERTY NAME                LOCATION           ENCUMBRANCE          LAND          B & F          LAND          B & F
- -------------------------   ---------------------   ---------------    -----------   ------------    ----------    -----------
                                                                                                    
Stonebridge                 San Antonio, TX               -                 2,515          2,096             -          5,268
Stonebridge                 Richfield Twp., MI            -                 2,044              -         2,111              -
Summit Ridge                Converse, TX                  -                 2,615          2,092             -          5,568
Sun Villa                   Reno, NV                    6,460               2,385         11,773             -            999
Sunset Ridge                Kyle, TX                      -                 2,190          2,775             -          5,115
Sunset Ridge                Portland, MI                  -                 2,044              -             -         12,508
Timber Ridge                Ft. Collins, CO               A                   990          9,231             -          1,522
Timberbrook                 Bristol, IN                   B                   490          3,400           101          5,491
Timberline Estates          Grand Rapids, MI              A                   535          4,867             -            802
Town and Country            Traverse City, MI             D                   406          3,736             -            309
Valley Brook                Indianapolis, IN              A                   150          3,500         1,277          9,367
Village Trails              Howard City, MI               D                   988          1,472             -            746
Water Oak                   Lady Lake, FL                 A                 2,503         17,478           170          6,813
West Glen Village           Indianapolis, IN              D                 1,100         10,028             -          1,315
Westbrook                   Toledo, OH                    A                 1,110         10,462             -          1,030
Westbrook Senior            Toledo, OH                    A                   355          3,295             -            383
White Lake                  White Lake, MI                A                   672          6,179             -          4,775
White Oak                   Mt. Morris, MI                A                   782          7,245           112          3,753
Willowbrook                 Toledo, OH                    A                   781          7,054             -            846
Windham Hills               Jackson, MI                   A                 2,673          2,364             -          7,936
Woodhaven Place             Woodhaven, MI                 A                   501          4,541             -          1,051
Woodlake Estates            Yoder, IN                     D                   632          3,674             -          2,788
Woodlake Trails             San Antonio, TX               -                 1,186            287           160          3,392
Woodland Park Estates       Eugene, OR                  6,702               1,592         14,398             -            493
Woods Edge                  West Lafayette, IN            D                   100          2,600             3          8,037
Woodside Terrace            Holland, OH                   A                 1,064          9,625             -          1,650
Worthington Arms            Lewis Center, OH              A                   376          2,624             -          1,505
Corporate Headquarters      Southfield, MI                -                     -              -             -          7,617
Sun Homes                   Various                       -                     -              -           704         54,674 (3)
                                                                       -----------   ------------    ----------    -----------
                                                                          134,694        831,439        13,815        402,371
                                                                       ===========   ============    ==========    ===========


                                    GROSS AMOUNT CARRIED AT
                                       DECEMBER 31, 2004
                            -------------------------------------------
                                                                                                   DATE OF
                                                                               ACCUMULATED      CONSTRUCTION (C)
     PROPERTY NAME             LAND          B & F            TOTAL           DEPRECIATION       ACQUISITION (A)
- -------------------------   -----------   -------------    ------------    -----------------    ----------------
                                                                                   
Stonebridge                      2,515           7,364           9,879                 839         2000(A&C)
Stonebridge                      4,155               -           4,155                   -          1998(C)
Summit Ridge                     2,615           7,660          10,275                 899         2000(A&C)
Sun Villa                        2,385          12,772          15,157               2,673          1998(A)
Sunset Ridge                     2,190           7,890          10,080               1,040         2000(A&C)
Sunset Ridge                     2,044          12,508          14,552               1,258          1998(C)
Timber Ridge                       990          10,753          11,743               2,967          1996(A)
Timberbrook                        591           8,891           9,482               2,936          1987(A)
Timberline Estates                 535           5,669           6,204               1,927          1994(A)
Town and Country                   406           4,045           4,451               1,179          1996(A)
Valley Brook                     1,427          12,867          14,294               4,146          1989(A)
Village Trails                     988           2,218           3,206                 467          1998(A)
Water Oak                        2,673          24,291          26,964               7,846          1993(A)
West Glen Village                1,100          11,343          12,443               3,791          1994(A)
Westbrook                        1,110          11,492          12,602               2,152          1999(A)
Westbrook Senior                   355           3,678           4,033                 428          2001(A)
White Lake                         672          10,954          11,626               2,284          1997(A)
White Oak                          894          10,998          11,892               2,525          1997(A)
Willowbrook                        781           7,900           8,681               1,659          1997(A)
Windham Hills                    2,673          10,300          12,973               1,824          1998(A)
Woodhaven Place                    501           5,592           6,093               1,183          1998(A)
Woodlake Estates                   632           6,462           7,094               1,226          1998(A)
Woodlake Trails                  1,346           3,679           5,025                 433         2000(A&C)
Woodland Park Estates            1,592          14,891          16,483               3,256          1998(A)
Woods Edge                         103          10,637          10,740               2,626          1985(A)
Woodside Terrace                 1,064          11,275          12,339               2,757          1997(A)
Worthington Arms                   376           4,129           4,505               1,394          1990(A)
Corporate Headquarters               -           7,617           7,617               2,061          Various
Sun Homes                          704          54,674          55,378               3,065          Various
                            -----------   -------------    ------------    ----------------
                               148,509 (2)   1,234,032       1,382,541             248,668
                            ===========   =============    ============    ================



A   These communities collateralize $389.2 million of secured debt.
B   These communities collateralize $40.8 million of secured debt.
C   These communities collateralize $4.5 million of secured debt.
D   These communities collateralize $496 million of secured debt.
(1) The initial cost for this property is included in the initial cost reported
    for Continental Estates.
(2) Includes $1.93 million of land classified in Property under development
(3) Includes $51.5 million of manufactured homes leased to residents in various
    communities


                                      F-36


SUN COMMUNITIES, INC.
REAL ESTATE AND ACCUMULATED DEPRECIATION, CONTINUED
DECEMBER 31, 2004
(amounts in thousands)

The change in investment in real estate for the years ended December 31, 2004,
2003 and 2002 is as follows:



                                                     2004              2003              2002
                                                 -----------       -----------       -----------
                                                                            
Balance, beginning of year                       $ 1,220,405       $ 1,174,837       $   953,656
Community and land acquisitions, including
  immediate improvements                             118,222             4,514            69,801
Community expansion and development                   11,606            14,426            25,355
Improvements, other                                   56,756            49,186           129,741
Dispositions and other                               (24,448)          (22,558)           (3,716)
                                                 -----------       -----------       -----------
Balance, end of year                             $ 1,382,541       $ 1,220,405       $ 1,174,837
                                                 ===========       ===========       ===========


The change in accumulated depreciation for the years ended December 31, 2004,
2003 and 2002 is as follows:



                                                     2004              2003              2002
                                                 -----------       -----------       -----------
                                                                            
Balance, beginning of year                       $   209,921       $   175,477       $   140,322
Depreciation for the period                           40,859            39,072            36,196
Dispositions and other                                (2,112)           (4,628)           (1,041)
                                                 -----------       -----------       -----------
Balance, end of year                             $   248,668       $   209,921       $   175,477
                                                 ===========       ===========       ===========



                                      F-37

                                 EXHIBIT INDEX

    EXHIBIT
     NUMBER                       DESCRIPTION
    -------                       -----------


     10.6     Form of Restricted Stock Award Agreement#

     10.28    One Hundred Seventy-Second Amendment to Second Amended and
              Restated Limited Partnership Agreement of the Operating
              Partnership

     10.29    Restricted Stock Award Agreement between Sun Communities, Inc. and
              Gary A. Shiffman, dated May 10, 2004#

     10.30    First Amendment to Restricted Stock Award Agreement between Sun
              Communities, Inc., and Gary A. Shiffman#

     10.31    Restricted Stock Award Agreement between Sun Communities, Inc. and
              Jeffrey P. Jorissen, dated May 10, 2004#

     10.32    First Amendment to Restricted Stock Award Agreement between Sun
              Communities, Inc. and Jeffrey P. Jorissen#

     12.1     Computation of Ratio of Earnings to Fixed Charges and Ratio
              Earnings to Combined Fixed Charges and Preferred Dividends

     21.1     List of Subsidiaries of Sun Communities, Inc.

     23.1     Consent of PriceWaterhouseCoopers LLP

     23.2     Consent of Grant Thornton LLP

     31.1     Certification of Chief Executive Officer pursuant to Section 302
              of the Sarbanes-Oxley Act of 2002

     31.2     Certification of Chief Financial Officer pursuant to Section 302
              of the Sarbanes-Oxley Act of 2002

     32.1     Certification of Chief Executive Officer and Chief Financial
              Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002