sui-20210630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021.

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

SUN COMMUNITIES INC.

(Exact Name of Registrant as Specified in its Charter)


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

27777 Franklin Rd,

Suite 200,

Southfield,

Michigan

48034

(Address of Principal Executive Offices)

(Zip Code)

(248) 208-2500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

SUI

New York Stock Exchange

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and ‘emerging growth company” in rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

☒

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Common Stock, $0.01 par value per share, outstanding as of July 20, 2021: 115,903,246

INDEX



PART I – FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Balance Sheets as of June 30, 2021 (Unaudited) and December 31, 2020	1
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)	2
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2021 and 2020 (Unaudited)	3
	Consolidated Statement of Equity for the Three Months Ended June 30, 2021 and 2020 (Unaudited)	4
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2021 and 2020 (Unaudited)	6
	Notes to Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	59
Item 4.	Controls and Procedures	60

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	61
Item 1A.	Risk Factors	61
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	62
Item 6.	Exhibits	63

	Signatures	65

SUN COMMUNITIES, INC.

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)


	(Unaudited)
	June 30, 2021		December 31, 2020
Assets
Land	$	2,412,629	$	2,119,364
Land improvements and buildings	8,995,041		8,480,597
Rental homes and improvements	622,397		637,603
Furniture, fixtures and equipment	529,549		447,039
Investment property	12,559,616		11,684,603
Accumulated depreciation	(2,165,564)		(1,968,812)
Investment property, net (including $508,055 and $438,918 for consolidated VIEs at June 30, 2021 and December 31, 2020; see Note 7)	10,394,052		9,715,791
Cash, cash equivalents and restricted cash	119,612		92,641
Marketable securities (see Note 14)	153,049		124,726
Inventory of manufactured homes	43,686		46,643
Notes and other receivables, net	262,333		221,650

Goodwill	448,317		428,833
Other intangible assets, net	295,663		305,611
Other assets, net (including $32,817 and $24,554 for consolidated VIEs at June 30, 2021 and December 31, 2020; see Note 7)	324,278		270,691
Total Assets	$	12,040,990	$	11,206,586
Liabilities
Secured debt (see Note 8) (including $74,571 and $47,706 for consolidated VIEs at June 30, 2021 and December 31, 2020; see Note 7)	$	3,457,734	$	3,489,983
Unsecured debt (see Note 8) (including $35,249 and $35,249 for consolidated VIE at June 30, 2021 and December 31, 2020; see Note 7)	853,441		1,267,093





Distributions payable	98,429		86,988
Advanced reservation deposits and rent	290,913		187,730
Accrued expenses and accounts payable	214,200		148,435
Other liabilities (including $44,944 and $21,957 for consolidated VIEs at June 30, 2021 and December 31, 2020; see Note 7)	184,846		134,650
Total Liabilities	5,099,563		5,314,879
Commitments and contingencies (see Note 15)
Temporary equity (see Note 9) (including $27,491 and $28,469 for consolidated VIEs at June 30, 2021 and December 31, 2020; see Note 7)	285,603		264,379









Stockholders' Equity

Common stock, $0.01 par value. Authorized: 180,000 shares; Issued and outstanding: 115,889 June 30, 2021 and 107,626 December 31, 2020	1,159		1,076
Additional paid-in capital	8,163,095		7,087,658
Accumulated other comprehensive income	5,197		3,178
Distributions in excess of accumulated earnings	(1,614,243)		(1,566,636)
Total Sun Communities, Inc. stockholders' equity	6,555,208		5,525,276
Noncontrolling interests
Common and preferred OP units	82,865		85,968
Consolidated VIEs (fully attributable to consolidated VIEs; see Note 7)	17,751		16,084
Total noncontrolling interests	100,616		102,052
Total Stockholders' Equity	6,655,824		5,627,328
Total Liabilities, Temporary Equity and Stockholders' Equity	$	12,040,990	$	11,206,586

See accompanying Notes to Consolidated Financial Statements.

SUN COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts) (Unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Revenues
Real property	$	405,905	$	251,127	$	736,518	$	509,476
Home sales	81,848		38,530		134,047		79,117
Service, retail, dining and entertainment	106,452		7,700		157,064		12,803
Interest	2,719		2,635		5,350		4,985
Brokerage commissions and other, net	6,939		3,274		12,899		7,187
Total Revenues	603,863		303,266		1,045,878		613,568
Expenses
Property operating and maintenance	129,961		70,804		233,514		140,638
Real estate tax	23,202		17,723		45,610		34,899
Home costs and selling	58,763		32,051		100,353		66,090
Service, retail, dining and entertainment	78,585		7,242		124,016		13,924
General and administrative	45,127		26,527		83,330		51,876
Catastrophic event-related charges, net	355		(566)		2,769		40
Business combination, net	(201)		—		1,031		—
Depreciation and amortization	126,423		87,265		249,727		170,954
Loss on extinguishment of debt (see Note 8)	8,108		1,930		8,108		5,209
Interest	37,681		31,428		77,198		63,844
Interest on mandatorily redeemable preferred OP units / equity	1,041		1,042		2,077		2,083
Total Expenses	509,045		275,446		927,733		549,557
Income Before Other Items	94,818		27,820		118,145		64,011
Gain / (loss) on remeasurement of marketable securities (see Note 14)	27,494		24,519		31,155		(4,128)
Gain / (loss) on foreign currency translation	(264)		10,374		(239)		(7,105)

Other expense, net	(660)		(821)		(1,759)		(1,793)
Gain / (loss) on remeasurement of notes receivable (see Note 4)	93		246		469		(1,866)
Income from nonconsolidated affiliates (see Note 6)	794		92		1,965		144
Gain / (loss) on remeasurement of investment in nonconsolidated affiliates (see Note 6)	(115)		1,132		(11)		(1,059)
Current tax expense (see Note 12)	(1,245)		(119)		(1,016)		(569)
Deferred tax benefit / (expense) (see Note 12)	(66)		112		81		242
Net Income	120,849		63,355		148,790		47,877
Less: Preferred return to preferred OP units / equity	3,035		1,584		5,899		3,154
Less: Income attributable to noncontrolling interests	7,044		2,861		7,339		1,899


Net Income Attributable to Sun Communities, Inc. Common Stockholders	$	110,770	$	58,910	$	135,552	$	42,824

Weighted average common shares outstanding - basic	112,082		95,859		110,007		94,134
Weighted average common shares outstanding - diluted	112,082		95,860		112,593		94,525

Basic earnings per share (see Note 13)	$	0.98	$	0.61	$	1.22	$	0.45
Diluted earnings per share (see Note 13)	$	0.98	$	0.61	$	1.22	$	0.45

See accompanying Notes to Consolidated Financial Statements.

SUN COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands) (Unaudited)


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Net Income	$	120,849	$	63,355	$	148,790	$	47,877
Foreign currency translation gain / (loss) adjustment	1,220		3,872		2,115		(3,428)

Total Comprehensive Income	122,069		67,227		150,905		44,449
Less: Comprehensive income attributable to noncontrolling interests	(7,100)		(2,883)		(7,435)		(1,615)
Comprehensive Income attributable to Sun Communities, Inc.	$	114,969	$	64,344	$	143,470	$	42,834

See accompanying Notes to Consolidated Financial Statements.

SUN COMMUNITIES, INC.

CONSOLIDATED STATEMENT OF EQUITY

(In thousands) (Unaudited)


	Temporary Equity		Stockholders' Equity
			Common Stock		Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Loss		Non-controlling Interests		Total Stockholders' Equity		Total Equity
Balance at December 31, 2020	$	264,379	$	1,076	$	7,087,658	$	(1,566,636)	$	3,178	$	102,052	$	5,627,328	$	5,891,707
Issuance of common stock and common OP units, net	—		42		522,222		—		—		—		522,264		522,264
Conversion of OP units	—		—		1,150		—		—		(1,150)		—		—

Other redeemable non-controlling interests	52		—		—		(52)		—		—		(52)		—
Share-based compensation - amortization and forfeitures	—		—		7,118		62		—		—		7,180		7,180




Foreign currency translation	—		—		—		—		855		40		895		895

Net income / (loss)	(1,568)		—		—		27,647		—		1,862		29,509		27,941
Distributions	(1,804)		—		—		(92,823)		—		(3,260)		(96,083)		(97,887)
Other	—		—		(20)		758		—		(141)		597		597
Balance at March 31, 2021	$	261,059	$	1,118	$	7,618,128	$	(1,631,044)	$	4,033	$	99,403	$	6,091,638	$	6,352,697
Issuance of common stock and common OP units, net	—		40		537,557		—		—		—		537,597		537,597
Conversion of OP units	—		1		296		—		—		(297)		—		—


Other redeemable non-controlling interests	53		—		—		(53)		—		—		(53)		—

Share-based compensation - amortization and forfeitures	—		—		7,099		74		—		—		7,173		7,173



Issuance of Series J preferred OP units	24,000		—		—		—		—		—		—		24,000
Foreign currency translation	—		—		—		—		1,164		56		1,220		1,220
Net income	2,448		—		—		113,804		—		4,597		118,401		120,849
Distributions	(1,957)		—		—		(96,188)		—		(3,143)		(99,331)		(101,288)
Other	—		—		15		(836)		—		—		(821)		(821)
Balance at June 30, 2021	$	285,603	$	1,159	$	8,163,095	$	(1,614,243)	$	5,197	$	100,616	$	6,655,824	$	6,941,427

SUN COMMUNITIES, INC.


			Stockholders' Equity
	Temporary Equity		Common Stock		Additional Paid-in Capital		Distributions in Excess of Accumulated Earnings		Accumulated Other Comprehensive Loss		Non-controlling Interests		Total Stockholders' Equity		Total Equity
Balance at December 31, 2019	$	78,004	$	932	$	5,213,264	$	(1,393,141)	$	(1,331)	$	56,228	$	3,875,952	$	3,953,956
Issuance of common stock and common OP units, net	—		1		(7,141)		—		—		—		(7,140)		(7,140)
Conversion of OP units	—		—		446		—		—		(446)		—		—

Other redeemable non-controlling interests	98		—		—		(85)		—		—		(85)		13
Share-based compensation - amortization and forfeitures	—		—		4,928		93		—		—		5,021		5,021



Issuance of Series E preferred OP units	—		—		181		—		—		8,819		9,000		9,000
Foreign currency translation	—		—		—		—		(6,994)		(306)		(7,300)		(7,300)
Remeasurement of notes receivable and equity method investment	—		—		—		1,953		—		—		1,953		1,953
Net income / (loss)	(1,195)		—		—		(14,514)		—		231		(14,283)		(15,478)
Distributions	(457)		—		—		(73,730)		—		(2,918)		(76,648)		(77,105)
Balance at March 31, 2020	$	76,450	$	933	$	5,211,678	$	(1,479,424)	$	(8,325)	$	61,608	$	3,786,470	$	3,862,920
Issuance of common stock and common OP units, net	—		49		628,506		—		—		10,114		638,669		638,669
Conversion of OP units	—		1		130		—		—		(131)		—		—

Other redeemable non-controlling interests	(641)		—		—		(67)		—		—		(67)		(708)
Issuance of Series F preferred OP units	8,965		—		—		—		—		—		—		8,965
Share-based compensation - amortization and forfeitures	—		—		7,284		92		—		—		7,376		7,376
Foreign currency translation	—		—		—		—		3,850		22		3,872		3,872
Net income / (loss)	(300)		—		—		60,492		—		3,163		63,655		63,355
Distributions	(492)		—		—		(77,635)		—		(2,971)		(80,606)		(81,098)
Balance at June 30, 2020	$	83,982	$	983	$	5,847,598	$	(1,496,542)	$	(4,475)	$	71,805	$	4,419,369	$	4,503,351

See accompanying Notes to Consolidated Financial Statements.

SUN COMMUNITIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)


	Six Months Ended
	June 30, 2021		June 30, 2020
Operating Activities
Net Cash Provided By Operating Activities	$	470,708	$	302,027
Investing Activities
Investment in properties	(300,430)		(268,708)
Acquisitions of properties, net of cash acquired	(593,336)		(78,869)




Proceeds from dispositions of assets and depreciated homes, net	42,731		24,459


Issuance of notes and other receivables	(12,773)		(25,044)

Repayments of notes and other receivables	2,840		1,719
Investments in nonconsolidated affiliates	(11,200)		(23,743)
Distributions from nonconsolidated affiliates	6,682		2,070

Net Cash Used For Investing Activities	(865,486)		(368,116)
Financing Activities
Issuance of common stock, OP units and preferred OP units, net	1,059,861		621,415



Borrowings on lines of credit	1,797,612		1,217,289
Payments on lines of credit	(2,801,742)		(1,279,468)
Proceeds from issuance of other debt	598,990		230,000
Payments on other debt	(34,911)		(208,592)

Fees paid in connection with extinguishment of debt	(195)		(6,226)


Distributions to stockholders, OP unit holders and preferred OP unit holders	(187,795)		(150,422)



Payments for deferred financing costs	(10,338)		(3,331)

Net Cash Provided By Financing Activities	421,482		420,665
Effect of exchange rate changes on cash, cash equivalents and restricted cash	267		(192)
Net change in cash, cash equivalents and restricted cash	26,971		354,384
Cash, cash equivalents and restricted cash, beginning of period	92,641		34,830
Cash, Cash Equivalents and Restricted Cash, End of Period	$	119,612	$	389,214


	Six Months Ended
	June 30, 2021		June 30, 2020
Supplemental Information
Cash paid for interest (net of capitalized interest of $2,392 and $4,561 respectively)	$	77,740	$	65,822
Cash paid for interest on mandatorily redeemable debt	$	2,077	$	2,083
Cash paid for income taxes	$	1,137	$	441
Noncash investing and financing activities


Change in distributions declared and outstanding	$	11,380	$	7,781
Conversion of common and preferred OP units	$	1,447	$	577

Asset held for sale	$	14,921	$	5,770








Noncash investing and financing activities at the date of acquisition
Acquisitions - Common stock and OP units issued	$	—	$	10,114


Acquisitions - Series E preferred interest	$	—	$	9,000
Acquisitions - Series F preferred interest	$	—	$	9,000



Acquisitions - Series J preferred interest	$	24,000	$	—



Acquisitions - Contingent consideration liability	$	3,439	$	—

See accompanying Notes to Consolidated Financial Statements.

1. Basis of Presentation

Sun Communities, Inc., a Maryland corporation, and all wholly-owned or majority-owned and controlled subsidiaries, including Sun Communities Operating Limited Partnership (the "Operating Partnership"), Sun Home Services, Inc. ("SHS") and Safe Harbor Marinas, LLC ("Safe Harbor") are referred to herein as the "Company," "us," "we," and "our."

We follow accounting standards set by the Financial Accounting Standards Board ("FASB"). FASB establishes accounting principles generally accepted in the United States of America ("GAAP"), which we follow to ensure that we consistently report our financial condition, results of operations and cash flows. References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification ("ASC"). These unaudited Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information and in accordance with GAAP. We present interim disclosures and certain information and footnote disclosures as required by SEC rules and regulations. Accordingly, the unaudited Consolidated Financial Statements do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying unaudited Consolidated Financial Statements reflect, in the opinion of management, all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of the interim financial statements. All intercompany transactions have been eliminated in consolidation.

During the three months ended March 31, 2021, we changed our organizational structure from a two-segment to a three-segment structure as a result of the recent acquisition of Safe Harbor and its internal organization. The new structure reflects how the chief operating decision maker manages the business, makes operating decisions, allocates resources and evaluates operating performance. Beginning with the three months ended March 31, 2021, we report our financial results consistent with our newly realigned operating segments. All prior period amounts are recast to conform to the way we internally manage our business and monitor segment performance. Certain reclassifications have been made to the prior period financial statements and related notes in order to conform to the current period presentation. The most significant changes were the combining of rental home revenue with real property revenue, the combining of rental home operating and maintenance expenses with property operating expenses, and the combining of home selling expenses with cost of home sales. Vacation rental home rent has been reclassified from ancillary income into real property. In addition, ancillary revenues and expenses have been renamed service, retail, dining & entertainment. There was no impact to prior period net income, stockholders equity or cash flows for any of the reclassifications.

The results of operations for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC on February 18, 2021 (our "2020 Annual Report"). These statements have been prepared on a basis that is substantially consistent with the accounting principles applied in our 2020 Annual Report.

Our three reportable segments are: (i) Manufactured home ("MH") communities, (ii) Recreational vehicle ("RV") resorts and (iii) Marinas.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

2. Revenue

The following tables detail our revenue by major source (in thousands):


	Three Months Ended
	June 30, 2021								June 30, 2020(1)
	MH		RV		Marina		Consolidated		MH		RV		Marina	Consolidated
Revenues
Real property	$	199,948	$	132,463	$	73,494	$	405,905	$	181,713	$	69,414	N/A	$	251,127
Home sales	69,922		11,926		—		81,848		35,074		3,456		N/A	38,530
Service, retail, dining and entertainment	1,850		22,364		82,238		106,452		1,074		6,626		N/A	7,700
Interest	2,084		621		14		2,719		2,140		495		N/A	2,635
Brokerage commissions and other, net	3,338		3,600		1		6,939		1,605		1,669		N/A	3,274
Total Revenues	$	277,142	$	170,974	$	155,747	$	603,863	$	221,606	$	81,660	N/A	$	303,266

(1) Recast to reflect segment changes.


	Six Months Ended
	June 30, 2021								June 30, 2020(1)
	MH		RV		Marina		Consolidated		MH		RV		Marina	Consolidated
Revenues
Real property	$	398,722	$	213,068	$	124,728	$	736,518	$	365,039	$	144,437	N/A	$	509,476
Home sales	115,254		18,793		—		134,047		70,857		8,260		N/A	79,117
Service, retail, dining and entertainment	3,714		26,758		126,592		157,064		3,126		9,677		N/A	12,803
Interest	4,170		1,158		22		5,350		4,138		847		N/A	4,985
Brokerage commissions and other, net	6,151		6,202		546		12,899		3,730		3,457		N/A	7,187
Total Revenues	$	528,011	$	265,979	$	251,888	$	1,045,878	$	446,890	$	166,678	N/A	$	613,568

(1) Recast to reflect segment changes.

Our revenue consists of Real property revenue at our MH, RV and marina properties, revenue from Home sales, Service, retail, dining and entertainment revenue, Interest income, and Brokerage commissions and other revenue.

The majority of our revenue is derived from site and home leases, and wet slip and dry storage space leases that are accounted for pursuant to ASC 842, "Leases." We account for all revenue from contracts with customers following ASC 606, "Revenue from Contracts with Customers" except for those that are within the scope of other topics in the FASB ASC. For additional information, refer to Note 1, "Significant Accounting Policies," in our 2020 Annual Report.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

3. Real Estate Acquisitions and Dispositions

2021 Acquisitions

During the six months ended June 30, 2021, we acquired the following communities, resorts and marinas:

Community Name

Type

Sites, Wet Slips and
Dry Storage Spaces

State / Province

Month Acquired

Sun Outdoors Association Island

RV: asset acquisition

294

January

Blue Water Beach Resort

RV: asset acquisition

177

February

Tranquility MHC

MH: asset acquisition

February

Islamorada and Angler House(1)

Marina: asset acquisition

251

February

Prime Martha's Vineyard(1)

Marina: asset acquisition

390

March

Pleasant Beach Campground

RV: asset acquisition

102

ON, Canada

March

Cherrystone Family Camping Resort

RV: asset acquisition

669

March

Beachwood Resort

RV: asset acquisition

672

March

ThemeWorld RV Resort

RV: asset acquisition

148

April

Sylvan Glen Estates(2)

MH: asset acquisition

476

April

Shelter Island Boatyard

Marina: asset acquisition

May

Lauderdale Marine Center

Marina: asset acquisition

202

May

Apponaug Harbor(3)

Marina: asset acquisition

378

June

Cabrillo Isle(4)

Marina: business combination

483

June

Marathon Marina

Marina: asset acquisition

147

June

Total

4,469

(1) Includes two marinas.

(2) In conjunction with the acquisition, we issued 240,000 Series J preferred OP units. As of June 30, 2021, 240,000 Series J preferred OP units were outstanding.

(3) Combined with an existing adjacent marina.

(4) Acquired in connection with Safe Harbor Marinas acquisition. Transfer of the marinas was contingent on receiving third party consent.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table summarizes the amount of assets acquired, net of liabilities assumed at the acquisition date and the consideration paid for the MH community, RV resort and marina acquisitions completed during the six months ended June 30, 2021 (in thousands):


	At Acquisition Date										Consideration
	Investment in property		Inventory of manufactured homes, boat parts and retail related items		In-place leases, goodwill and other intangible assets		Other assets / (liabilities), net		Total identifiable assets acquired net of liabilities assumed		Cash and escrow		Temporary and permanent equity		Total consideration
Asset Acquisition
Sun Outdoors Association Island	$	14,965	$	—	$	41	$	(248)	$	14,758	$	14,758	$	—	$	14,758
Blue Water Beach Resort	9,000		—		—		(151)		8,849		8,849		—		8,849
Tranquility MHC	1,250		—		—		(1)		1,249		1,249		—		1,249
Islamorada and Angler House(1)	18,001		22		269		(317)		17,975		17,975		—		17,975
Prime Martha's Vineyard(1)	22,258		138		127		(573)		21,950		21,950		—		21,950
Pleasant Beach Campground	1,531		—		57		1		1,589		1,589		—		1,589
Cherrystone Family Camping Resort	59,669		—		231		(2,029)		57,871		57,871		—		57,871
Beachwood Resort	14,004		—		211		(7,616)		6,599		6,599		—		6,599
ThemeWorld RV Resort	25,000		—		—		(104)		24,896		24,896		—		24,896
Sylvan Glen Estates	23,469		20		531		(269)		23,751		(249)		24,000		23,751
Shelter Island Boatyard	9,520		132		402		(85)		9,969		9,969		—		9,969
Lauderdale Marine Center	336,992		—		3,282		958		341,232		341,232		—		341,232
Apponaug Harbor	6,540		—		89		(689)		5,940		5,940		—		5,940
Marathon Marina	19,129		19		261		(227)		19,182		19,182		—		19,182



Business Combination(2)
Cabrillo Isle	37,647		—		10,073		(703)		47,017		47,017		—		47,017

Total	$	598,975	$	331	$	15,574	$	(12,053)	$	602,827	$	578,827	$	24,000	$	602,827

(1) Includes two marinas.

(2) Refer to Note 5, "Goodwill and Other Intangibles Assets," for additional detail on goodwill and other intangible assets.

As of June 30, 2021, we have incurred and capitalized $5.6 million of transaction costs which have been capitalized and allocated among the various fixed asset categories for purchases that meet the asset acquisition criteria. As of June 30, 2021, we also incurred $1.0 million of business combination expenses which are expensed for purchases deemed to be business combinations.

The following unaudited pro forma financial information presents the results of our operations for the three and six months ended June 30, 2021 and 2020, as if the properties combined in 2021 had been acquired on January 1, 2020. The unaudited pro forma results reflect certain adjustments for items that are not expected to have a continuing impact, such as adjustments for transaction costs incurred, management fees and purchase accounting.

The information presented below has been prepared for comparative purposes only and does not purport to be indicative of either future results of operations or the results of operations that would have actually occurred had the acquisition been consummated on January 1, 2020 (in thousands, except per-share data):



	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Total revenues	$	605,163	$	304,552	$	1,048,426	$	616,121
Net income attributable to Sun Communities, Inc. common stockholders	$	111,075	$	59,421	$	136,258	$	43,782
Net income per share attributable to Sun Communities, Inc. common stockholders - basic	$	0.99	$	0.62	$	1.24	$	0.47
Net income per share attributable to Sun Communities, Inc. common stockholders - diluted	$	0.99	$	0.62	$	1.24	$	0.46

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Real Estate Held-For-Sale

We periodically classify real estate assets as "held-for-sale." An asset is classified as held-for-sale after an active program to sell an asset has commenced and when the sale is probable. Within "Other Assets, net" on the Consolidated Balance Sheets is approximately $14.9 million of real estate held-for-sale as of June 30, 2021.

Refer to Note 18, "Subsequent Events," for information regarding real estate acquisitions and dispositions completed after June 30, 2021.

2020 Acquisitions and dispositions

For the year ended December 31, 2020, we acquired the following communities, resorts and marinas.

Community Name

Type

Sites, Wet Slips and Dry Storage Spaces

Development Sites

State

Month Acquired

Cape Cod(1)

RV: asset acquisition

230

—

January

Jellystone Natural Bridge

RV: asset acquisition

299

—

February

Forest Springs(2)

MH: asset acquisition

372

—

May

Crown Villa

RV: asset acquisition

123

—

June

Flamingo Lake

RV: asset acquisition

421

—

July

Woodsmoke

RV: asset acquisition

300

—

September

Jellystone Lone Star

RV: asset acquisition

344

—

September

El Capitan & Ocean Mesa(3)(4)

RV: asset acquisition

266

109

September

Highland Green Estates & Troy Villa(5)

MH: asset acquisition

1,162

—

September

Safe Harbor Marinas(6)

Marina: business combination

37,305

—

Various

October

Safe Harbor Hideaway Bay(7)

Marina: business combination

628

—

November

Gig Harbor

RV: asset acquisition

115

—

November

Maine MH Portfolio(8)

MH: asset acquisition

1,083

—

November

Safe Harbor Anacapa Isle(7)

Marina: business combination

453

—

December

Mears Annapolis

Marina: asset acquisitions

184

—

December

Wickford

Marina: asset acquisitions

—

December

Rybovich Portfolio(9)

Marina: business combination

—

December

Rockland

Marina: asset acquisitions

173

—

December

Mouse Mountain

MH / RV: asset acquisition

304

—

December

Lakeview Mobile Estates

MH: asset acquisition

296

—

December

Shenandoah Acres

RV: asset acquisition

522

—

December

Jellystone at Barton Lake

RV: asset acquisition

555

—

December

Kittatinny Portfolio(4)

RV: asset acquisition

527

—

NY & PA

December

Total

45,800

109

(1) In conjunction with the acquisition, we issued Series E preferred OP units. As of December 31, 2020, 90,000 Series E preferred OP units were outstanding.

(2) In conjunction with the acquisition, we issued Series F preferred OP units and common OP units. As of December 31, 2020, 90,000 Series F preferred OP units, specific to this acquisition, were outstanding.

(3) In conjunction with the acquisition, we issued Series G preferred OP units. As of December 31, 2020, 240,710 Series G preferred OP units were outstanding.

(4) Includes two RV resorts.

(5) Includes two communities.

(6) Includes 99 owned marinas located in 22 states. In conjunction with the acquisition, we issued Series H preferred OP units. As of December 31, 2020, 581,407 Series H preferred OP units were outstanding.

(7) Acquired in connection with Safe Harbor Marinas acquisition. Transfer of marinas was contingent on receiving third party consents.

(8) Includes six communities.

(9) Includes two marinas. In conjunction with the acquisition, we issued Series I preferred OP units. As of December 31, 2020, 922,000 Series I preferred OP units were outstanding.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following table summarizes the amounts of assets acquired, net of liabilities assumed at the acquisition date and the consideration paid for the acquisitions completed in 2020 (in thousands):


	At Acquisition Date										Consideration
	Investment in property		Inventory of manufactured homes, boat parts and retail related items		Goodwill, In-place leases and other intangible assets		Other assets / (liabilities), net		Total identifiable assets acquired net of liabilities assumed		Cash and escrow		Debt assumed		Temporary and permanent equity		Total consideration
Asset Acquisition
Cape Cod	$	13,350	$	—	$	150	$	(295)	$	13,205	$	4,205	$	—	$	9,000	$	13,205
Jellystone Natural Bridge	11,364		—		80		(391)		11,053		11,053		—		—		11,053
Forest Springs	51,949		1,337		2,160		(107)		55,339		36,260		—		19,079		55,339
Crown Villa	16,792		—		—		(230)		16,562		16,562		—		—		16,562
Flamingo Lake	34,000		—		—		(155)		33,845		33,845		—		—		33,845
Woodsmoke	25,120		40		840		(461)		25,539		25,539		—		—		25,539
Jellystone Lone Star	21,000		—		—		(703)		20,297		20,297		—		—		20,297
El Capitan & Ocean Mesa	69,690		—		—		(10,321)		59,369		32,108		—		27,261		59,369
Highland Green Estates & Troy Villa	60,988		1,679		2,030		(15)		64,682		64,682		—		—		64,682
Gig Harbor	15,250		—		—		(22)		15,228		15,228		—		—		15,228
Maine MH Portfolio	79,890		—		1,359		30		81,279		72,479		8,800		—		81,279
Mears Annapolis	24,354		—		6,922		(546)		30,730		30,730		—		—		30,730
Wickford	3,468		—		42		(121)		3,389		3,389		—		—		3,389
Rockland	15,082		348		101		(368)		15,163		15,163		—		—		15,163
Mouse Mountain	15,221		—		279		(4)		15,496		15,496		—		—		15,496
Lakeview Mobile Estates	22,917		195		638		(72)		23,678		23,678		—		—		23,678
Shenandoah Acres	16,166		—		834		(197)		16,803		16,803		—		—		16,803
Jellystone at Barton Lake	23,462		—		538		(397)		23,603		23,603		—		—		23,603
Kittatinny Portfolio	16,220		—		30		29		16,279		16,279		—		—		16,279
Business Combination(1)
Safe Harbor Marinas	1,643,879		5,700		418,033		(26,831)		2,040,781		1,141,797		829,000		69,984		2,040,781
Hideaway Bay	26,218		23		7,242		(1,077)		32,406		32,406		—		—		32,406
Anacapa Isle	10,924		—		3,146		60		14,130		14,130		—		—		14,130
Rybovich Portfolio(2)	122,064		620		249,840		(37)		372,487		258,123		—		114,364		372,487
Total	$	2,339,368	$	9,942	$	694,264	$	(42,231)	$	3,001,343	$	1,923,855	$	837,800	$	239,688	$	3,001,343

(1) Refer to Note 5, "Goodwill and Other Intangibles Assets," for additional detail on goodwill and other intangible assets.

(2) Purchase price allocations were preliminary as of December 31, 2020 and were adjusted as of March 31, 2021 based on revised purchase price allocations.

As of December 31, 2020, we have incurred $23.0 million of expensed business combination transaction costs (in relation to the acquisition Safe Harbor, Hideaway Bay, Anacapa Isle, and the Rybovich Portfolio, as each such acquisition meets the criteria to be accounted for as business combination), and $13.4 million of capitalized transaction costs for asset acquisitions which have been allocated among the various categories above.

Land for Expansion / Development

During the year ended December 31, 2020, we acquired eight land parcels which are located in Orange Beach, Alabama; Jensen Beach, Florida; Citra Lakes, Florida; Comal County, Texas; and Menifee, California for total consideration of $9.7 million. Seven of the land parcels are adjacent to existing communities.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Dispositions

Real estate held-for-sale of $32.1 million as of December 31, 2020, was reclassified from Other assets, net to various line items on the Consolidated Balance Sheets during the three months ended March 31, 2021, as the sale of those assets was no longer probable. As of March 31, 2021, the primary reclassifications were $34.5 million of assets within Investment property, net and $3.8 million within Other liabilities on the Consolidated Balance Sheets.

On July 1, 2020, we sold a manufactured housing community located in Montana, containing 226 sites, for $12.6 million. The gain from the sale of the property was approximately $5.6 million.

4. Notes and Other Receivables

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


	June 30, 2021		December 31, 2020
Installment notes receivable on manufactured homes, net	$	82,506	$	85,866
Notes receivable from real estate developers	61,955		52,638
Other receivables, net	117,872		83,146
Total Notes and Other Receivables, net	$	262,333	$	221,650

Installment Notes Receivable on Manufactured Homes

Installment notes receivable are measured at fair value, using indicative pricing models from third party valuation specialists, in accordance with ASC Topic 820 "Fair Value Measurements and Disclosures." The balances of installment notes receivable of $82.5 million (net of fair value adjustment of $0.8 million) and $85.9 million (net of fair value adjustment of $1.3 million) as of June 30, 2021 and December 31, 2020, respectively, are collateralized by manufactured homes. The notes represent financing to purchasers of manufactured homes primarily located in our communities and require monthly principal and interest payments. The notes had a net weighted average interest rate (net of servicing costs) and maturity of 7.7 percent and 14.9 years as of June 30, 2021, and 7.8 percent and 15.2 years as of December 31, 2020, respectively. Refer to Note 14, "Fair Value of Financial Instruments," for additional detail.

The change in the aggregate balance of the installment notes receivable is as follows (in thousands):


	Six Months Ended		Year Ended
	June 30, 2021		December 31, 2020
Beginning balance of gross installment notes receivable	$	87,142	$	96,225
Financed sale of manufactured homes	3,933		5,014
Adjustment for notes receivable related to assets held for sale	45		(477)

Principal payments and payoffs from our customers	(6,177)		(8,977)
Principal reduction from repossessed homes	(1,627)		(4,643)
Ending balance of gross installment notes receivable	83,316		87,142

Beginning balance of allowance for losses on installment notes receivables	—		(645)

Initial fair value option adjustment	—		645
Ending balance of allowance for losses on installment notes receivables	—		—

Beginning balance of fair value adjustments on gross installment notes receivable	(1,276)		—
Initial fair value option adjustment	—		991
Adjustment for notes receivable related to assets held for sale	(3)		7
Fair value adjustment	469		(2,274)
Fair value adjustments on gross installment notes receivable	(810)		(1,276)

Ending balance of installment notes receivable, net	$	82,506	$	85,866

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Notes Receivable from Real Estate Developers

Notes receivable from real estate developers are measured at fair value, using indicative pricing models from third party valuation specialists, in accordance with ASC Topic 820 "Fair Value Measurements and Disclosures." As of June 30, 2021 and December 31, 2020, the notes receivable balances of $62.0 million and $52.6 million, respectively are primarily comprised of construction loans provided to real estate developers. The notes receivable from real estate developers have a net weighted average interest rate and maturity of 6.3 percent and 1.4 years as of June 30, 2021, and 6.2 percent and 1.8 years as of December 31, 2020, respectively. As of June 30, 2021, real estate developers collectively have $11.6 million of undrawn funds on their loans. There were no material adjustments to the fair value of notes receivable from the real estate developers for the six months ended June 30, 2021 and 2020. Refer to Note 14, "Fair Value of Financial Instruments."

Other Receivables, net

As of June 30, 2021, other receivables were comprised of amounts due from: home sale proceeds of $47.8 million, marina customers for storage service and lease payments of $28.3 million (net of allowance of $1.7 million), insurance receivables of $11.2 million, residents for rent, utility charges, fees and other pass through charges of $10.1 million (net of allowance of $5.8 million) and other receivables of $20.5 million. As of December 31, 2020, other receivables were comprised of amounts due from: home sale proceeds of $23.6 million, marina customers for storage services and lease payments of $19.2 million (net of allowance of $1.4 million), insurance receivables of $13.6 million, residents for rent, utility charges, fees and other pass through charges of $7.1 million (net of allowance of $7.2 million) and other receivables of $19.6 million.

In June 2020, we made a convertible secured loan to Rezplot Systems LLC, a nonconsolidated affiliate in which we have a 50 percent ownership interest. The note allows for a principal amount of up to $10.0 million to be drawn down over a period of three years, bears an interest rate of 3.0 percent and is secured by all the assets of Rezplot Systems LLC. The outstanding balances were $5.6 million and $2.0 million as of June 30, 2021 and December 31, 2020, respectively, and are included in the Notes and other receivables, net line item on the Consolidated Balance Sheets. Refer to Note 6, "Investment in Nonconsolidated Affiliates," for additional information on Rezplot Systems LLC.

5. Goodwill and Other Intangibles Assets

Our intangible assets include goodwill, in-place leases, non-competition agreements, trademarks and trade names, customer relationships, and franchise agreements and other intangible assets. These intangible assets are recorded in Goodwill, and Other intangible assets, net on the Consolidated Balance Sheets.

The gross carrying amounts and accumulated amortization of our intangible assets are as follows (in thousands):


		June 30, 2021				December 31, 2020
Intangible Asset	Useful Life	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Goodwill	Indefinite	$	448,317	N/A		$	428,833	N/A
In-place leases(1)	Expected term	155,075		(109,559)		145,531		(92,327)
Non-competition agreements	5 years	10,000		(1,000)		10,000		—
Trademarks and trade names	Various(2)	116,500		(417)		116,500		—
Customer relationships	7 - 10 years	107,958		(6,691)		108,000		(2,371)
Franchise agreements and other intangible assets	5.5 - 20 years	28,355		(4,558)		23,856		(3,578)
Total		$	866,205	$	(122,225)	$	832,720	$	(98,276)

(1)In-place leases as of June 30, 2021 include amounts related to certain assets previously held-for-sale, and included in Other assets, net, as of year ended December 31, 2020. Assets previously classified as held-for-sale were reclassified to held for investment as of January 1, 2021.

(2)All trademarks and trade names have an indefinite useful life except for one that has a three year useful life as of the acquisition date.

Goodwill impairment

Upon review of the qualitative factors in accordance with ASC 350-20, "Goodwill and Other," we determined that no impairment indicators existed as of June 30, 2021 and December 31, 2020. As a result, there was no impairment of goodwill during the six months ended June 30, 2021.

Goodwill was preliminary as of December 31, 2020, subject to revisions based on purchase price allocations for the Safe Harbor and Rybovich business combination acquisitions which are reflected in the revised goodwill balance at June 30, 2021. There was an incremental acquisition during the quarter ended June 30, 2021 which resulted in additional goodwill.

Other intangible assets, net

Amortization expenses related to the Other intangible assets are as follows (in thousands):


	Three Months Ended				Six Months Ended
Intangible Asset Amortization Expense	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
In-place leases	$	6,977	$	3,580	$	16,793	$	7,031
Non-competition agreements	500		—		1,000		—
Trademarks and trade names	209		—		417		—
Customer relationships	2,709		—		4,320		—
Franchise fees and other intangible assets	492		204		982		409
Total	$	10,887	$	3,784	$	23,512	$	7,440

We anticipate amortization expense for Other intangible assets to be as follows for the next five years (in thousands):


	Remainder 2021		2022		2023		2024		2025
In-place leases	$	10,418	$	12,216	$	8,730	$	5,836	$	4,996
Non-competition agreements	1,000		2,000		2,000		2,000		2,000
Trademarks and trade names	417		833		833		—		—
Customer relationships	5,418		10,837		10,837		10,837		10,837
Franchise agreements and other intangible assets	993		1,986		1,957		1,893		1,872
Total	$	18,246	$	27,872	$	24,357	$	20,566	$	19,705

6. Investment in Nonconsolidated Affiliates

Investments in joint ventures that are not consolidated, nor recorded at cost, are accounted for using the equity method of accounting as prescribed in ASC Topic 323, "Investments - Equity Method and Joint Ventures." Investments in nonconsolidated affiliates are recorded within Other assets, net on the Consolidated Balance Sheets. Equity income and loss are recorded in the Income from nonconsolidated affiliates line item on the Consolidated Statements of Operations.

RezPlot Systems LLC ("Rezplot")

At June 30, 2021 and December 31, 2020, we had a 50 percent ownership interest in RezPlot, a RV reservation software technology company, which interest we acquired in January 2019.

Sungenia joint venture ("Sungenia JV")

At June 30, 2021 and December 31, 2020, we had a 50 percent ownership interest in Sungenia JV, a joint venture formed between us and Ingenia Communities Group in November 2018, to establish and grow a manufactured housing community development program in Australia.

GTSC LLC ("GTSC")

At June 30, 2021 and December 31, 2020, we had a 40 percent ownership interest in GTSC, which engages in acquiring, holding and selling loans secured, directly or indirectly, by manufactured homes located in our communities.

Origen Financial Services, LLC ("OFS")

At June 30, 2021 and December 31, 2020, we had a 22.9 percent ownership interest in OFS, an end-to-end online resident screening and document management suite.

SV Lift, LLC ("SV Lift")

At June 30, 2021 and December 31, 2020, we had a 50 percent ownership interest in SV Lift, which owns, operates and leases an aircraft.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The investment balance in each nonconsolidated affiliate is as follows (in thousands):


	Six Months Ended		Year Ended
Investment	June 30, 2021		December 31, 2020
Investment in RezPlot	$	2,091	$	3,047
Investment in Sungenia JV	27,071		26,890
Investment in GTSC	29,677		25,495
Investment in OFS	278		152
Investment in SV Lift	3,203		3,490
Total	$	62,320	$	59,074

The income / (loss) from each nonconsolidated affiliate is as follows (in thousands):


	Three Months Ended				Six Months Ended
Income / (Loss) from Nonconsolidated Affiliates	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
RezPlot equity loss	$	(469)	$	(654)	$	(956)	$	(1,154)
Sungenia JV equity income	75		262		809		147
GTSC equity income	1,416		700		2,597		1,460
OFS equity income	97		42		126		80
SV Lift equity loss	(325)		(258)		(611)		(389)
Total Income from Nonconsolidated Affiliates	$	794	$	92	$	1,965	$	144

The change in the GTSC investment balance is as follows (in thousands):


	Six Months Ended		Year Ended
	June 30, 2021		December 31, 2020
Beginning balance	$	25,495	$	18,488

Initial fair value option adjustment	—		317
Contributions	10,876		19,030
Distributions	(9,280)		(14,676)
Equity earnings	2,597		3,944
Fair value adjustment	(11)		(1,608)
Ending Balance	$	29,677	$	25,495

The change in the Sungenia JV investment balance is as follows (in thousands):


	Six Months Ended		Year Ended
	June 30, 2021		December 31, 2020
Beginning balance	$	26,890	$	11,995
Cumulative translation adjustment	(628)		2,180
Contributions	—		12,377

Equity earnings	809		338

Ending Balance	$	27,071	$	26,890

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

7. Consolidated Variable Interest Entities

The Operating Partnership

We consolidate the Operating Partnership under the guidance set forth in ASC 810 "Consolidation." We evaluated whether Operating Partnership met the criteria for classification as variable interest entity ("VIE") or, alternatively, voting interest entity and concluded that the Operating Partnership met the criteria of a VIE. Our significant asset is our investment in the Operating Partnership, and consequently, substantially all of our assets and liabilities represent those assets and liabilities of the Operating Partnership. We are the sole general partner and generally have the power to manage and have complete control over the Operating Partnership and the obligation to absorb its losses or the right to receive its benefits.

Sun NG RV Resorts LLC ("Sun NG Resorts"); Rudgate Village SPE, LLC, Rudgate Clinton SPE, LLC, and Rudgate Clinton Estates SPE, LLC (collectively, "Rudgate"); Sun NG Whitewater RV Resorts LLC; FPG Sun Menifee 80 LLC, SHM South Fork JV, LLC

We consolidate Sun NG Resorts, Rudgate, Sun NG Whitewater RV Resorts LLC, FPG Sun Menifee 80 LLC and SHM South Fork JV, LLC under the guidance set forth in ASC Topic 810 "Consolidation." We concluded that each entity is a VIE where we are the primary beneficiary, as we have the power to direct the significant activities of, and absorb the significant losses and receive the significant benefits from each entity. Refer to Note 8, "Debt and Line of Credit," for additional information on Sun NG Resorts and Note 9, "Equity and Temporary Equity," for additional information on Sun NG Resorts, Sun NG Whitewater RV Resorts LLC, FPG Sun Menifee 80 LLC and SHM South Fork JV, LLC.

The following table summarizes the assets and liabilities of Sun NG Resorts, Rudgate, Sun NG Whitewater RV Resorts LLC, FPG Sun Menifee 80 LLC and SHM South Fork JV, LLC included in our Consolidated Balance Sheets after eliminations (in thousands):


	June 30, 2021		December 31, 2020
Assets
Investment property, net	$	508,055	$	438,918
Other assets, net	32,817		24,554
Total Assets	$	540,872	$	463,472

Liabilities and Other Equity
Secured debt	$	74,571	$	47,706
Unsecured debt	35,249		35,249
Other liabilities	44,944		21,957
Total Liabilities	154,764		104,912
Temporary equity	27,491		28,469
Noncontrolling interests (including SHM South Fork JV, LLC)	17,751		16,084
Total Liabilities and Other Equity	$	200,006	$	149,465

Investment property, net and Other assets, net related to the consolidated VIEs, with the exception of the Operating Partnership, comprised approximately 4.5 percent and 4.1 percent of our consolidated total assets at June 30, 2021 and December 31, 2020, respectively. Secured debt, Unsecured debt and Other liabilities comprised 3.0 percent and 2.0 percent of our consolidated total liabilities at June 30, 2021 and December 31, 2020, respectively. Equity Interests and Noncontrolling interests related to the consolidated VIEs, on an absolute basis, comprised less than 1.0 percent of our consolidated total equity at June 30, 2021 and December 31, 2020, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

8. Debt and Line of Credit

The following table sets forth certain information regarding debt including premiums, discounts and deferred financing costs (in thousands except statistical information):


	Carrying Amount				Weighted Average Years to Maturity		Weighted Average Interest Rates
	June 30, 2021		December 31, 2020		June 30, 2021	December 31, 2020	June 30, 2021		December 31, 2020
Secured Debt
Mortgage term loans - Life Companies	$	1,642,185	$	1,658,239	15.8	16.3	3.991	%	3.990	%
Mortgage term loans - FNMA	1,146,146		1,150,924		8.6	9.1	3.226	%	3.230	%
Mortgage term loans - CMBS	264,364		267,205		2.4	2.9	4.789	%	4.789	%
Mortgage term loans - FMCC	365,402		368,599		3.4	3.9	3.853	%	3.854	%
Total Mortgage Term Loans	3,418,097		3,444,967
Collateralized term loan	39,637		45,016		2.3	2.8	1.300	%	1.310	%

Total Secured Debt	3,457,734		3,489,983

Unsecured Debt
Senior unsecured notes	591,688		—		10.0	0.0	2.700	%	—	%
Line of credit and other debt	191,841		1,197,181		3.9	3.7	0.928	%	2.107	%
Preferred equity - Sun NG Resorts - mandatorily redeemable	35,249		35,249		3.3	3.8	6.000	%	6.000	%
Preferred OP units - mandatorily redeemable	34,663		34,663		4.6	5.1	5.932	%	5.932	%
Total Unsecured Debt	853,441		1,267,093
Total Debt	$	4,311,175	$	4,757,076	10.4	9.4	3.519	%	3.370	%

Secured Debt

Mortgage Term Loans

During the six months ended June 30, 2021, no mortgage term loans were paid off. During the year ended December 31, 2020, we paid off the following mortgage term loans (in thousands except statistical information):


Three Months Ended	Repayment Amount			Fixed Interest Rate			Maturity Date	(Gain) / Loss on Extinguishment of Debt
June 30, 2020	$	52,710	(1)	5.980	%	(3)	March 1, 2021 July 11, 2021 December 1, 2021	$	1,930
March 31, 2020	$	99,607		5.837	%		March 1, 2021	$	3,403
	$	19,922	(2)	5.830	%	(3)	July 1, 2020	$	(124)

(1)Includes four mortgage term loans, two due to mature on March 1, 2021, one due to mature on July 11, 2021 and the other due to mature on December 1, 2021.

(2)Includes four mortgage term loans due to mature on July 1, 2020.

(3)The interest rate represents the weighted average interest rate on mortgage term loans.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

During the six months ended June 30, 2021, we did not enter into any new mortgage term loans. During the year ended December 31, 2020, we entered into the following mortgage term loans (in thousands except statistical information):


Three Months Ended	Loan Amount			Term (in years)	Interest Rate			Maturity Date
December 31, 2020	$	268,800	(1)	12	2.662	%	(2)	May 1, 2030 November 1, 2032
March 31, 2020	$	230,000		15	2.995	%		April 1, 2035

(1)Includes three mortgage term loans, one for $8.8 million due to mature on May 1, 2030 and two for $39.5 million and $220.5 million, due to mature on November 1, 2032.

(2)The interest rate represents the weighted average interest rate on mortgage term loans.

The mortgage term loans totaling $3.4 billion as of June 30, 2021, are secured by 192 properties comprised of 76,408 sites representing approximately $3.2 billion of net book value.

Collateralized Term Loan

In October 2019, we assumed a term loan facility, in the amount of $58.0 million in relation to an acquisition. The term loan has a four-year term ending October 29, 2023, and bears interest at a floating rate based on the Eurodollar rate or Prime rate plus a margin ranging from 1.20 percent to 2.05 percent. As of June 30, 2021, the margin based on our leverage ratio was 1.20 percent. The outstanding balance was $39.6 million at June 30, 2021 and $45.0 million at December 31, 2020. These balances are recorded in the Secured debt line item on the Consolidated Balance Sheets. The collateralized term loan balance as of June 30, 2021, is secured by 31 properties comprised of 5,165 sites representing approximately $375.2 million of net book value.

Unsecured Debt

Senior Unsecured Notes

On June 28, 2021, we issued $600.0 million of senior unsecured notes with an interest rate of 2.70 percent and a ten-year term, due 2031 (the "2031 Notes"). Interest on the senior unsecured notes is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on January 15, 2022. The net proceeds from the offering were approximately $592.4 million, after deducting underwriters' discounts and estimated offering expenses. The proceeds were used to pay down borrowings under our line of credit. The outstanding balance was $591.7 million at June 30, 2021. This balance is recorded in the Unsecured debt line item on the Consolidated Balance Sheets.

Line of Credit

On June 14, 2021, we entered into a new credit agreement (the "New Credit Agreement") with certain lenders. The New Credit Agreement combined and replaced our prior $750.0 million credit facility, which was scheduled to mature on May 21, 2023, (the "A&R Facility"), and the $1.8 billion credit facility between Safe Harbor and certain lenders, which was scheduled to mature on October 11, 2024 (the "Safe Harbor Facility"). The Safe Harbor Facility was terminated in connection with the execution of the New Credit Agreement. We repaid all amounts due and outstanding under the Safe Harbor Facility on or prior to such effective date. We recognized a Loss on extinguishment of debt in our Consolidated Statement of Operations related to the termination of the A&R Facility and the Safe Harbor Facility of $0.2 million and $7.9 million, respectively.

Pursuant to the New Credit Agreement, we may borrow up to $2.0 billion under a revolving loan (the "New Credit Facility"). The New Credit Facility is available to fund all of the Company's business, including its marina business conducted by Safe Harbor. The New Credit Agreement also permits, subject to the satisfaction of certain conditions, additional borrowings (with the consent of the lenders) in an amount not to exceed $1.0 billion with the option to treat all, or a portion, of such additional funds as an incremental term loan.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The New Credit Facility has a four-year term ending June 14, 2025, and, at our option, the maturity date may be extended for two additional six-month periods, subject to the satisfaction of certain conditions. However, the maturity date with respect to $500.0 million of available borrowing under the New Credit Facility is October 11, 2024, which, under the terms of the New Credit Agreement, may not be extended. The New Credit Facility bears interest at a floating rate based on the Adjusted Eurocurrency Rate or Australian Bank Bill Swap Bid Rate (BBSY), plus a margin that is determined based on the Company's credit ratings calculated in accordance with the New Credit Agreement, which can range from 0.725 percent to 1.400 percent. As of June 30, 2021, the margin based on our credit ratings was 0.850 percent on the New Credit Facility.

At the lenders' option, the New Credit Facility will become immediately due and payable upon an event of default under the New Credit Agreement. We had $190.3 million of borrowings on the New Credit Facility as of June 30, 2021, all scheduled to mature June 14, 2025. As of December 31, 2020, we had $40.4 million of borrowings on the revolving loan and no borrowings on the term loan under our A&R Facility, respectively. As of December 31, 2020, we had $652.0 million and $500.0 million of borrowings under the revolving loan and term loan under Safe Harbor Facility, respectively. These balances are recorded in the Unsecured debt line item on the Consolidated Balance Sheets.

The New Credit Facility provides us with the ability to issue letters of credit. Our issuance of letters of credit does not increase our borrowings outstanding under the New Credit Facility, but does reduce the borrowing amount available. At June 30, 2021 and December 31, 2020, we had approximately $3.2 million and $2.4 million (including none and $0.3 million associated with Safe Harbor's prior credit facility) of outstanding letters of credit, respectively.

Floor Plan

We have a $12.0 million manufactured home floor plan facility renewable indefinitely until our lender provides us at least a 12-month notice of their intent to terminate the agreement. The interest rate is 100 basis points over the greater of the prime rate as quoted in the Wall Street Journal on the first business day of each month or 6.0 percent. At June 30, 2021, the effective interest rate was 7.0 percent. The outstanding balance was $1.5 million as of June 30, 2021 and $4.8 million as of December 31, 2020. These balances are recorded within the Unsecured debt line item on the Consolidated Balance Sheets.

Preferred Equity - Sun NG Resorts - mandatorily redeemable

In connection with the investment in Sun NG Resorts, $35.3 million of mandatorily redeemable Preferred Equity ("Preferred Equity - Sun NG Resorts") was purchased by unrelated third parties. The Preferred Equity - Sun NG Resorts carries a preferred rate of return of 6.0 percent per annum. The Preferred Equity - Sun NG Resorts has a seven-year term ending June 1, 2025 and $33.4 million can be redeemed in the fourth quarter of 2024 at the holders' option. The Preferred Equity - Sun NG Resorts as of June 30, 2021 was $35.2 million. These balances are recorded within the Unsecured debt line item on the Consolidated Balance Sheets. Refer to Note 7, "Consolidated Variable Interest Entities," and Note 9, "Equity and Temporary Equity," for additional information.

Preferred OP Units - mandatorily redeemable

Preferred OP units at June 30, 2021 and December 31, 2020 include $34.7 million of Aspen preferred OP units issued by the Operating Partnership. As of June 30, 2021, these units are convertible indirectly into 394,814 shares of our common stock.

In January 2020, we amended the Operating Partnership's partnership agreement. The amendment extended the automatic redemption date and reduced the annual distribution rate for 270,000 of the Aspen preferred OP units (the "Extended Units"). Subject to certain limitations, at any time prior to January 1, 2024 (or prior to January 1, 2034 with respect to the Extended Units), the holder of each Aspen preferred OP unit at its option may convert such Aspen preferred OP unit into: (a) if the average closing price of our common stock for the preceding ten trading days is $68.00 per share or less, 0.397 common OP units; or (b) if the ten-day average closing price is greater than $68.00 per share, the number of common OP units is determined by dividing (i) the sum of (A) $27.00 plus (B) 25.0 percent of the amount by which the ten-day average closing price exceeds $68.00 per share, by (ii) the ten-day average closing price. The current preferred distribution rate is 3.8 percent on the Extended Units and 6.5 percent on all other Aspen preferred OP units. On January 2, 2024 (or January 2, 2034 with respect to the Extended Units), we are required to redeem for cash all Aspen preferred OP units that have not been converted to common OP units. As of June 30, 2021, 270,000 of the Extended Units and 1,013,819 other Aspen preferred units were outstanding. These balances are recorded within the Unsecured debt line item on the Consolidated Balance Sheets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Covenants

The mortgage term loans, collateralized term loans, senior unsecured notes, New Credit Facility and floor plan are subject to various financial and other covenants. The most restrictive covenants are pursuant to (a) the terms of the New Credit Facility, which contains minimum fixed charge coverage ratio, maximum leverage, distribution ratios and variable rate indebtedness and (b) senior unsecured notes, which contain a total debt to total assets, secured debt to total assets, consolidated income available for debt service to debt service and unencumbered total asset value to unsecured debt covenants. At June 30, 2021, we were in compliance with all covenants.

In addition, certain of our subsidiary borrowers own properties that secure loans. These subsidiaries are consolidated within our accompanying Consolidated Financial Statements, however, each of these subsidiaries' assets and credit are not available to satisfy our debts and other obligations, any of our other subsidiaries or any other person or entity.

Off-Balance Sheet Arrangements - Nonconsolidated Affiliate Indebtedness

GTSC - During September 2019, GTSC, a nonconsolidated affiliate in which we have a 40 percent ownership interest, entered into a warehouse line of credit with a maximum loan amount of $125.0 million. During September 2020 and May 2021, the maximum amount was increased to $180.0 million and $230.0 million, respectively with an option to increase to $255.0 million subject to lender's consent. As of June 30, 2021, the aggregate carrying amount of debt, including both our and our partner's share, incurred by GTSC was $201.9 million (of which our proportionate share is $80.8 million). As of December 31, 2020, the aggregate carrying amount of debt, including both our and our partner's share, incurred by GTSC was $167.7 million (of which our proportionate share is $67.1 million). The debt bears interest at a variable rate based on LIBOR plus 1.65 percent per annum and matures on September 15, 2023.

Sungenia JV - During May 2020, Sungenia JV, a nonconsolidated affiliate in which we have a 50 percent ownership interest, entered into a debt facility agreement with a maximum loan amount of 27.0 million Australian dollars, or $20.3 million converted at the June 30, 2021 exchange rate. As of June 30, 2021, the aggregate carrying amount of debt, including both our and our partners' share, incurred by Sungenia JV was $6.5 million (of which our proportionate share is $3.2 million). As of December 31, 2020, the aggregate carrying amount of debt, including both our and our partners' share, incurred by Sungenia JV was $6.7 million (of which our proportionate share is $3.3 million). The debt bears interest at a variable rate based on the BBSY rate plus 2.05 percent per annum and is available for a minimum of three years.

9. Equity and Temporary Equity

Permanent Equity

Universal Shelf Registration Statement

On April 5, 2021, in connection with the expiration of our universal shelf registration statement on Form S-3, that was filed with the SEC on April 6, 2018, we filed a new universal shelf registration statement on Form S-3 with the SEC. The new universal shelf registration statement was deemed automatically effective and provides for the registration of unspecified amounts of equity and debt securities. We have the authority to issue 200,000,000 shares of capital stock, of which 180,000,000 shares are common stock, par value $0.01 per share, and 20,000,000 are shares of preferred stock, par value $0.01 per share. As of June 30, 2021, we had 115,889,185 shares of common stock issued and outstanding and no shares of preferred stock were issued and outstanding.

Public Equity Offerings

On March 2, 2021, we priced a $1.1 billion underwritten public offering of an aggregate of 8,050,000 shares at a public offering price of $140.00 per share, before underwriting discounts and commissions. The offering consisted of 4,000,000 shares offered directly by us and 4,050,000 shares offered under a forward equity sales agreement (the "March 2021 Forward Equity Offering"). We sold the 4,000,000 shares on March 9, 2021 and received net proceeds of $537.6 million after deducting expenses related to the offering. In May and June 2021, we completed the physical settlement of the remaining 4,050,000 shares and received net proceeds of $539.7 million after deducting expenses related to the offering. Proceeds from the offering were used to acquire assets and pay down the Safe Harbor Facility.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

On September 30, 2020 and October 1, 2020, we entered into two forward sale agreements (the "September 2020 Forward Equity Offerings") relating to an underwritten registered public offering of 9,200,000 shares of our common stock at a public offering price of $139.50 per share. The offering closed on October 5, 2020. On October 26, 2020, we physically settled the September 2020 Forward Equity Offering (by the delivery of shares of our common stock). Proceeds from the offering were approximately $1.23 billion after deducting expenses related to the offering. We used the net proceeds of this offering to fund the cash portion of the acquisition of Safe Harbor, and for working capital and general corporate purposes.

In May 2020, we closed an underwritten registered public offering of 4,968,000 shares of common stock. Proceeds from the offering were $633.1 million after deducting expenses related to the offering. We used the net proceeds of this offering to repay borrowings outstanding under the revolving loan under our senior credit facility.

At the Market Offering Sales Agreements

On June 4, 2021, we entered into an At the Market Offering Sales Agreement (the "Sales Agreement") with certain sales agents, and forward sellers pursuant to which we may sell, from time to time, up to an aggregate gross sales price of $500.0 million of our common stock, through the sales agents, acting as our sales agents or, if applicable, as forward sellers, or directly to the sales agents as principals for their own accounts. The sales agents and forward sellers are entitled to compensation in an agreed amount not to exceed 2.0 percent of the gross price per share for any shares sold under the Sales Agreement. There were no issuances of common stock under the new Sales Agreement during the six months ended June 30, 2021.

Upon entering into the Sales Agreement, we simultaneously terminated our previous At the Market Offering Sales Agreement entered into in July 2017. There were no issuances of common stock under the prior sales agreement during the six months ended June 30, 2021 or during the year ended December 31, 2020. From inception through termination of the prior sales agreement, we sold shares of our common stock for gross proceeds of $163.8 million.

Issuances of Common Stock and Common OP Units in Connection with the Acquisition of Certain Properties

In December 2020, in connection with the acquisition of the Rybovich Portfolio, we issued 130,475 Common OP units.

In October 2020, in connection with the acquisition of Safe Harbor, we issued 55,403 Common OP units.

In May 2020, in connection with the acquisition of the Forest Springs community, we issued 82,420 Common OP units.

Equity Interests - SHM South Fork JV, LLC

In October 2020, in conjunction with the acquisition of Safe Harbor, we indirectly acquired $4.3 million of Safe Harbor's equity interest in SHM South Fork JV, LLC, a joint venture created for the purpose of acquiring land and constructing a marina in Fort Lauderdale, Florida. The Safe Harbor Equity Interests - SHM South Fork JV, LLC balance was $4.1 million and $4.3 million at the six months ended June 30, 2021 and the year December 31, 2020, respectively. Refer to Note 7, "Consolidated Variable Interest Entities," for additional information.

Issuance of Series E Preferred OP Units

In January 2020, we issued 90,000 Series E preferred OP units in connection with the acquisition of Cape Cod RV Resort. The Series E preferred OP units have a stated issuance price of $100.00 per OP Unit and carry a preferred return of 5.25 percent until the second anniversary of the issuance date. Commencing with the second anniversary of the issuance date, the Series E Preferred OP Units carry a preferred return of 5.50 percent. Commencing the first anniversary of the issuance date, subject to certain limitations, each Series E Preferred OP Unit can be exchanged for our common stock equal to the quotient obtained by dividing $100.00 by $145.00 (as such ratio is subject to adjustments for certain capital events). As of June 30, 2021, 90,000 Series E preferred OP Units were outstanding. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional information.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Temporary Equity

Issuance of Preferred OP Units

Issuance of Series J Preferred OP Units - In April 2021, we issued 240,000 Series J preferred OP units in connection with the acquisition of the Sylvan Glen. The Series J preferred OP units have a stated issuance price of $100.00 per OP unit and carry a preferred return of 2.85 percent. Subject to certain limitations, at any time after the Series J issuance date, each Series J preferred OP unit can be exchanged for a number of shares of our common stock equal to the quotient obtained by dividing $100.00 by $165.00 (as such ratio is subject to adjustments for certain capital events) at the holder's option. Each holder may require redemption in cash (i) during the 30-day period following a change of control of the Company or (ii) any time after the fifth anniversary of the Series J issuance date. As of June 30, 2021, 240,000 Series J preferred OP units were outstanding. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional information.

Issuance of Series I Preferred OP Units - In December 2020, we issued 922,000 Series I preferred OP units in connection with the acquisition of the Rybovich Portfolio. The Series I preferred OP units have a stated issuance price of $100.00 per OP unit and carry a preferred return of 3.0 percent. Subject to certain limitations, at any time after the Series I issuance date, each Series I preferred OP unit can be exchanged for a number of shares of our common stock equal to the quotient obtained by dividing $100.00 by $164.00 (as such ratio is subject to adjustments for certain capital events) at the holder's option. Each holder may require redemption in cash after the fifth anniversary of the Series I issuance date or upon the holder's death. As of June 30, 2021, 922,000 Series I preferred OP units were outstanding. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional information.

Issuance of Series H Preferred OP Units - In October 2020, we issued 581,407 Series H preferred OP units in connection with the acquisition of Safe Harbor. The Series H preferred OP units have a stated issuance price of $100.00 per OP unit and carry a preferred return of 3.0 percent. Subject to certain limitations, at any time after the Series H issuance date, each Series H preferred OP unit can be exchanged for a number of shares of our common stock equal to the quotient obtained by dividing $100.00 by $164.00 (as such ratio is subject to adjustments for certain capital events) at the holder's option. Each holder may require redemption in cash after the fifth anniversary of the Series H issuance date or upon the holder's death. As of June 30, 2021, 581,407 Series H preferred OP units were outstanding. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional information.

Issuance of Series G Preferred OP Units - In September 2020, we issued 260,710 Series G preferred OP units in connection with the acquisition of El Capitan & Ocean Mesa Resorts. The Series G preferred OP units have a stated issuance price of $100.00 per OP unit and carry a preferred return of 3.2 percent. Subject to certain limitations, at any time after the Series G issuance date, each Series G preferred OP unit can be exchanged for a number of shares of our common stock equal to the quotient obtained by dividing $100.00 by $155.00 (as such ratio is subject to adjustments for certain capital events) at the holder's option. Each holder may require redemption in cash after the fifth anniversary of the Series G issuance date or upon the holder's death. As of June 30, 2021, 240,710 Series G preferred OP units were outstanding. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional information.

Issuance of Series F Preferred OP Units - In May 2020, we issued 90,000 Series F preferred OP units in connection with the acquisition of Forest Springs. The Series F preferred OP units have a stated issuance price of $100.00 per OP unit and carry a preferred return of 3.0 percent. Subject to certain limitations, at any time after the Series F issuance date, each Series F preferred OP unit can be exchanged for a number of shares of our common stock equal to the quotient obtained by dividing $100.00 by $160.00 (as such ratio is subject to adjustments for certain capital events) at the holder's option. Each holder may require redemption in cash after the fifth anniversary of the Series F issuance date or upon the holder's death. As of June 30, 2021, 90,000 Series F preferred OP units were outstanding. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional information.

Issuance of Series D Preferred OP Units - In February 2019, we issued 488,958 Series D preferred OP units in connection with the acquisition of Country Village Estates. The Series D preferred OP units have a stated issuance price of $100.00 per OP unit and carry a preferred return of 3.75 percent until the second anniversary of the issuance date. Commencing with the second anniversary of the issuance date, the Series D preferred OP units carry a preferred return of 4.0 percent. Commencing with the first anniversary of the issuance date, each Series D preferred OP unit can be exchanged for our common stock equal to the quotient obtained by dividing $100.00 by $125.00 (as such ratio is subject to adjustments for certain capital events) at the holder's option. The holders may require redemption in cash after the fifth anniversary of the Series D issuance date or upon the holder's death. As of June 30, 2021, 488,958 Series D preferred OP units were outstanding. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional information.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Equity Interests

Equity Interest - FPG Sun Menifee 80 LLC - In October 2020, in connection with the investment in land for future development in the city of Menifee in California, at the property known as FPG Sun Menifee 80, LLC, Foremost Pacific Group, LLC, "FPG," purchased $0.1 million of common equity interest in the land (referred to as "Equity Interest - FPG Sun Menifee 80 LLC"). The Equity Interest - FPG Sun Menifee 80 LLC does not have a fixed maturity date. Upon the occurrence of certain events, either FPG or Sun FPG Venture LLC, our subsidiary, can trigger a process under which we may be required to purchase the Equity Interests - FPG Sun Menifee 80 LLC from FPG. The Equity Interest - FPG Sun Menifee 80 LLC balance was $0.1 million at the six months ended June 30, 2021 and December 31, 2020. Refer to Note 7, "Consolidated Variable Interest Entities," for additional information.

Equity Interest - NG Sun Whitewater LLC - In August 2019, in connection with the investment in land at the property known as Whitewater, NG Sun Whitewater LLC purchased $2.4 million of common equity interest in Sun NG Whitewater RV Resorts LLC (referred to as "Equity Interest - NG Sun Whitewater LLC"). The Equity Interest - NG Sun Whitewater LLC does not have a fixed maturity date. Upon the occurrence of certain events, either NG Sun Whitewater LLC or Sun NG LLC, our subsidiary, can trigger a process under which we may be required to purchase the Equity Interest - NG Sun Whitewater LLC from NG Sun Whitewater LLC. The Equity Interest - NG Sun Whitewater LLC balance was $5.1 million at the six months ended June 30, 2021 and year ended December 31, 2020. Refer to Note 7, "Consolidated Variable Interest Entities," for additional information.

Equity Interest - NG Sun LLC - In June 2018, in connection with the investment in Sun NG Resorts, unrelated third parties purchased $6.5 million of Series B preferred equity interests and $15.4 million of common equity interest in Sun NG Resorts (herein jointly referred to as "Equity Interest - NG Sun LLC"). In April and September 2020, in connection with the acquisitions of Glen Ellis RV Park and Lone Star RV Park, $3.0 million of Series B preferred equity interests were converted to common equity interests. The Series B preferred equity interests carry a preferred return at a rate that, at any time, is equal to the interest rate on Sun NG Resorts' indebtedness at such time. The current rate of return is 5.0 percent. The Equity Interest - NG Sun LLC does not have a fixed maturity date and can be redeemed in the fourth quarters of 2024, 2025 and 2026 at the holders' option. Sun NG LLC, our subsidiary, has the right during certain periods each year, with or without cause, or for cause at any time, to elect to buy NG Sun LLC's interest. During a limited period in 2022, NG Sun LLC has the right to put its interest to Sun NG LLC. If either party exercises their option, the property management agreement will be terminated, and we are required to purchase the remaining interests of NG Sun LLC and the property management agreement at fair value. The Equity Interest - NG Sun LLC balance was $22.3 million at the six months ended June 30, 2021 and year ended December 31, 2020. Refer to Note 7, "Consolidated Variable Interest Entities," and Note 8, "Debt and Line of Credit," for additional information.

Conversions

Conversions to Common Stock - Subject to certain limitations, holders can convert certain series of stock and OP units to shares of our common stock at any time. Below is the activity of conversions during the six months ended June 30, 2021 and 2020:


		Six Months Ended		Six Months Ended
		June 30, 2021		June 30, 2020
Series	Conversion Rate	Units / Shares Converted	Common Stock(1)	Units / Shares Converted	Common Stock(1)
Common OP unit	1.0000	37,862	37,862	26,105	26,105
Series A-1 preferred OP unit	2.4390	6,610	16,119	9,114	22,226

(1)Calculation may yield minor differences due to rounding incorporated in the above numbers.

Distributions

Distributions declared for the three months ended June 30, 2021 were as follows:

Distributions

Record Date

Payment Date

Distribution Per Share

Total Distribution (in Thousands)

Common Stock, Common OP units and Restricted Stock

6/30/2021

7/15/2021

0.83

98,320

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

10. Share-Based Compensation

As of June 30, 2021, we had two share-based compensation plans: the Sun Communities, Inc. 2015 Equity Incentive Plan ("2015 Equity Incentive Plan") and the First Amended and Restated 2004 Non-Employee Director Option Plan ("2004 Non-Employee Director Option Plan"). We believe granting equity awards will provide certain executives, key employees and directors additional incentives to promote our financial success and promote employee and director retention by providing an opportunity to acquire or increase the direct proprietary interest of those individuals in our operations and future.

During the six months ended June 30, 2021 and 2020, shares were granted as follows:


Grant Period	Type	Plan	Shares Granted		Grant Date Fair Value Per Share			Vesting Type	Vesting Anniversary	Percentage
2021	Executive Officers	2015 Equity Incentive Plan	54,000		$	151.89	(1)	Time Based	20.0% annually over 5 years
2021	Executive Officers	2015 Equity Incentive Plan	81,000	(2)	$	94.32	(2)	Market Condition	3rd	100.0	%
2021	Executive Officers	2015 Equity Incentive Plan	15,000		$	151.89	(1)	Time Based	33.3% annually over 3 years
2021	Executive Officers	2015 Equity Incentive Plan	15,000	(3)	$	87.49	(3)	Market Condition	3rd	100.0	%
2021	Key Employees	2015 Equity Incentive Plan	28,856		$	151.89	(1)	Time Based	33.3% annually over 3 years
2021	Key Employees	2015 Equity Incentive Plan	61,550		$	143.28	(1)	Time Based	20.0% annually over 5 years
2021	Executive Officers	2015 Equity Incentive Plan	3,400		$	147.19	(1)	Time Based	20.0% annually over 5 years
2021	Executive Officers	2015 Equity Incentive Plan	5,100	(4)	$	96.41	(4)	Market Condition	3rd	100.0	%
2021	Directors	2004 Non-Employee Director Option Plan	1,509		$	147.19	(1)	Time Based	3rd	100.0	%
2021	Directors	2004 Non-Employee Director Option Plan	10,200		$	148.44	(1)	Time Based	3rd	100.0	%
2020	Key Employees	2015 Equity Incentive Plan	13,873		$	140.39	(1)	Time Based	20.0% annually over 5 years
2020	Executive Officers	2015 Equity Incentive Plan	69,368		$	137.63	(1)	Time Based	20.0% annually over 5 years
2020	Key Employees	2015 Equity Incentive Plan	1,500		$	143.20	(1)	Time Based	20.0% annually over 5 years
2020	Key Employees	2015 Equity Incentive Plan	51,790		$	162.42	(1)	Time Based	20.0% annually over 5 years
2020	Executive Officers	2015 Equity Incentive Plan	46,000		$	165.97	(1)	Time Based	20.0% annually over 5 years
2020	Executive Officers	2015 Equity Incentive Plan	69,000	(5)	$	125.47	(5)	Market Condition	3rd	100.0	%
2020	Directors	2004 Non-Employee Director Option Plan	10,200		$	147.97	(1)	Time Based	3rd	100.0	%

(1)The fair values of the grants were determined by using the average closing price of our common stock on the dates the shares were issued.

(2)Share-based compensation for restricted stock awards with market conditions is measured based on an estimate of shares expected to vest. We estimate the fair value of share-based compensation for restricted stock with market conditions using a Monte Carlo simulation. At the grant date our common stock price was $151.89. Based on the Monte Carlo simulation we expect 62.1 percent of the 81,000 shares to vest.

(3)Share-based compensation for restricted stock awards with market conditions is measured based on an estimate of shares expected to vest. We estimate the fair value of share-based compensation for restricted stock with market conditions using a Monte Carlo simulation. At the grant date our common stock price was $151.89. Based on the Monte Carlo simulation we expect 57.6 percent of the 15,000 shares to vest.

(4)Share-based compensation for restricted stock awards with market conditions is measured based on an estimate of shares expected to vest. We estimate the fair value of share-based compensation for restricted stock with market conditions using a Monte Carlo simulation. At the grant date our common stock price was $147.19. Based on the Monte Carlo simulation we expect 65.5 percent of the 5,100 shares to vest.

(5)Share-based compensation for restricted stock awards with market conditions is measured based on an estimate of shares expected to vest. We estimate the fair value of share-based compensation for restricted stock with market conditions using a Monte Carlo simulation. At the grant date our common stock price was $165.97. Based on the Monte Carlo simulation we expect 75.6 percent of the 69,000 shares to vest.

Vesting

The vesting requirements for 285,224 and 248,155 restricted shares granted to our executives, directors and employees were satisfied during the six months ended June 30, 2021 and 2020, respectively.

Stock Options

During the six months ended June 30, 2021, 1,500 shares of common stock were issued in connection with the exercise of stock options with net proceeds of less than $0.1 million. There were no stock options outstanding as of June 30, 2021. During the six months ended June 30, 2020, no stock options were exercised.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

11. Segment Reporting

ASC Topic 280, "Segment Reporting" ("ASC 280"), establishes standards for the way the business enterprises report information about operating segments in its financial statements. As described in Note 1, "Basis of Presentation," Effective January 1, 2021, we transitioned from a two-segment to a three-segment structure as a result of the recent acquisition of Safe Harbor and its internal organization.

The MH segment owns, operates, develops, or has an interest in, a portfolio of MH communities and is in the business of acquiring, operating and developing ground up MH communities to provide affordable housing solutions to residents. The MH segment also provides manufactured home sales and leasing services to tenants and prospective tenants of our communities.

The RV segment owns, operates, develops, or has an interest in, a portfolio of RV resorts and is in the business of acquiring, operating and developing ground up RV resorts throughout the U.S. and in Canada. It also provides leasing services for vacation rentals within the RV resorts.

The marina segment owns, operates, has an interest in a portfolio, and develops marinas, and is in the business of acquiring, and operating marinas throughout the U.S. with the majority of such marinas concentrated in coastal regions and others located in various inland regions.

Hybrid properties are classified to a segment based on the predominant site counts at the properties.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

A presentation of segment financial information is summarized as follows (in thousands):


	Three Months Ended
	June 30, 2021								June 30, 2020(1)
	MH		RV		Marinas		Consolidated		MH		RV		Marinas	Consolidated
Operating revenues	$	271,720	$	166,753	$	155,732	$	594,205	$	217,861	$	79,496	N/A	$	297,357
Property operating expenses	111,628		85,968		92,915		290,511		83,431		44,389		N/A	127,820
Net Operating Income	$	160,092	$	80,785	$	62,817	$	303,694	$	134,430	$	35,107	N/A	$	169,537
Adjustments to arrive at net income
Interest income							2,719							2,635
Brokerage commissions and other revenues, net							6,939							3,274

General and administrative expense							(45,127)							(26,527)
Catastrophic event-related charges, net							(355)							566
Business combination expense, net							201							—
Depreciation and amortization							(126,423)							(87,265)

Loss on extinguishment of debt (see Note 8)							(8,108)							(1,930)
Interest expense							(37,681)							(31,428)
Interest on mandatorily redeemable preferred OP units / equity							(1,041)							(1,042)
Loss on remeasurement of marketable securities							27,494							24,519
Gain / (loss) on foreign currency translation							(264)							10,374

Other expense, net							(660)							(821)
Loss on remeasurement of notes receivable							93							246
Income from nonconsolidated affiliates (see Note 6)							794							92
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates							(115)							1,132
Current tax expense							(1,245)							(119)
Deferred tax benefit / (expense) (see Note 12)							(66)							112
Net Income							120,849							63,355
Less: Preferred return to preferred OP units / equity							3,035							1,584
Less: Income attributable to noncontrolling interests							7,044							2,861



Net Income Attributable to Sun Communities, Inc. Common Stockholders							$	110,770						$	58,910

(1) Recast to reflect segment changes.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)


	Six Months Ended
	June 30, 2021								June 30, 2020(1)
	MH		RV		Marinas		Consolidated		MH		RV		Marinas	Consolidated
Revenues	$	517,690	$	258,619	$	251,320	$	1,027,629	$	439,022	$	162,374	N/A	$	601,396
Operating expenses / Cost of sales	208,318		138,064		157,111		503,493		168,502		87,049		N/A	255,551
Net Operating Income / Gross Profit	$	309,372	$	120,555	$	94,209	$	524,136	$	270,520	$	75,325	N/A	$	345,845
Adjustments to arrive at net income
Interest income							5,350							4,985
Brokerage commissions and other revenues, net							12,899							7,187

General and administrative expense							(83,330)							(51,876)
Catastrophic event-related charges, net							(2,769)							(40)
Business combination expense, net							(1,031)							—
Depreciation and amortization							(249,727)							(170,954)

Loss on extinguishment of debt (see Note 8)							(8,108)							(5,209)
Interest expense							(77,198)							(63,844)
Interest on mandatorily redeemable preferred OP units / equity							(2,077)							(2,083)
Gain / (loss) on remeasurement of marketable securities							31,155							(4,128)
Loss on foreign currency translation							(239)							(7,105)

Other expense, net							(1,759)							(1,793)
Gain / (loss) on remeasurement of notes receivable							469							(1,866)
Income from nonconsolidated affiliates (see Note 6)							1,965							144
Loss on remeasurement of investment in nonconsolidated affiliates							(11)							(1,059)
Current tax expense							(1,016)							(569)
Deferred tax benefit (see Note 12)							81							242
Net Income							148,790							47,877
Less: Preferred return to preferred OP units / equity							5,899							3,154
Less: Income attributable to noncontrolling interests							7,339							1,899



Net Income Attributable to Sun Communities, Inc. Common Stockholders							$	135,552						$	42,824

(1) Recast to reflect segment changes.


	June 30, 2021								December 31, 2020(1)
	MH		RV		Marinas		Consolidated		MH		RV		Marinas		Consolidated
Identifiable Assets
Investment property, net	$	4,815,014	$	3,251,466	$	2,327,572	$	10,394,052	$	4,823,174	$	3,038,686	$	1,853,931	$	9,715,791
Cash, cash equivalents and restricted cash	61,163		33,278		25,171		119,612		53,152		28,919		10,570		92,641
Marketable securities	99,119		53,930		—		153,049		80,776		43,950		—		124,726
Inventory of manufactured homes	33,064		10,622		—		43,686		33,448		13,195		—		46,643
Notes and other receivables, net	167,642		55,027		39,664		262,333		144,027		44,002		33,621		221,650
Goodwill	—		—		448,317		448,317		—		—		428,833		428,833
Other intangible assets, net	29,394		23,601		242,668		295,663		33,998		23,819		247,794		305,611
Other assets, net	181,702		45,797		96,779		324,278		184,917		38,075		47,699		270,691
Total Assets	$	5,387,098	$	3,473,721	$	3,180,171	$	12,040,990	$	5,353,492	$	3,230,646	$	2,622,448	$	11,206,586

(1) Recast to reflect segment changes.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

12. Income Taxes

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

Qualification as a REIT involves the satisfaction of numerous requirements (on an annual and quarterly basis) established under highly technical and complex Code provisions for which there are limited judicial or administrative interpretations and involves the determination of various factual matters and circumstances not entirely within our control. In addition, frequent changes occur in the area of REIT taxation, which requires us to continually monitor our tax status. We analyzed the various REIT tests and confirmed that we continued to qualify as a REIT for the six months ended June 30, 2021.

As a REIT, we generally will not be subject to United States ("U.S.") federal income taxes at the corporate level on the ordinary taxable income we distribute to our stockholders as dividends. If we fail to qualify as a REIT in any taxable year, our taxable income could be subject to U.S. federal income tax at regular corporate rates. Even if we qualify as a REIT, we may be subject to certain state and local income taxes as well as U.S. federal income and excise taxes on our undistributed income. In addition, taxable income from non-REIT activities managed through taxable REIT subsidiaries is subject to federal, state, and local income taxes. We are also subject to local income taxes in Canada as a result of the acquisition in 2016 of certain properties located in Canada. We do not provide for withholding taxes on our undistributed earnings from our Canadian subsidiaries as they are reinvested and will continue to be reinvested indefinitely outside of the U.S. However, we are subject to Australian withholding taxes on distributions from our investment in Ingenia Communities Group.

Deferred tax assets and liabilities reflect the impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and the basis of such assets and liabilities as measured by tax laws. Deferred tax assets are reduced, if necessary, by a valuation allowance to the amount where realization is more likely than not assured after considering all available evidence. Our temporary differences primarily relate to net operating loss carryforwards, and depreciation and basis differences between tax and GAAP. Our deferred tax assets that have a full valuation allowance relate to our taxable REIT subsidiaries. Net deferred tax liabilities of $20.4 million and $20.5 million for Canadian entities have been recorded in relation to corporate entities and included in other liabilities in our Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020, respectively. U.S. federal deferred tax liabilities of $0.1 million have been recorded and included in our Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020.

We had no unrecognized tax benefits as of June 30, 2021 and 2020. We do not expect significant changes in tax positions that would result in unrecognized tax benefits within one year of June 30, 2021.

For the three and six months ended June 30, 2021 we recorded a current tax expense for federal, state, and Canadian income taxes and Australian withholding taxes of $1.2 million and $1.0 million, respectively. For the three and six months ended June 30, 2020 we recorded a current tax expense for federal, state and Canadian income taxes of $0.1 million and $0.6 million, respectively.

For the three and six months ended June 30, 2021 we recorded a deferred tax expense of $66.0 thousand and a deferred tax benefit of $0.1 million, respectively. For the three and six months ended June 30, 2020 we recorded a deferred tax benefit of $0.1 million and $0.2 million, respectively.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

13. Earnings Per Share

Earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period on a basic and diluted basis. We calculate diluted earnings per share using the more dilutive of the treasury stock method and the two-class method.

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

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

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

Computations of basic and diluted earnings per share were as follows (in thousands, except per share data):


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Numerator
Net Income Attributable to Sun Communities, Inc. Common Stockholders	$	110,770	$	58,910	$	135,552	$	42,824
Less: allocation to restricted stock awards	691		340		829		128
Basic earnings - Net Income attributable to common stockholders after allocation to restricted stock awards	$	110,079	$	58,570	$	134,723	$	42,696
Add: allocation to restricted stock awards	—		—		—		128
Add: allocation to common equity	—		—		3,142		—
Diluted earnings - Net Income attributable to common stockholders after allocation to restricted stock awards(1)	$	110,079	$	58,570	$	137,865	$	42,824


Denominator
Weighted average common shares outstanding	112,082		95,859		110,007		94,134

Add: dilutive stock options	—		1		—		1
Add: dilutive restricted stock	—		—		—		390
Add: common equity	—		—		2,586		—
Diluted weighted average common shares and securities(1)	112,082		95,860		112,593		94,525
Earnings Per Share Available to Common Stockholders After Allocation
Basic earnings per share	$	0.98	$	0.61	$	1.22	$	0.45
Diluted earnings per share(1)	$	0.98	$	0.61	$	1.22	$	0.45

(1) For the three and six months ended June 30, 2021, and the three months ended June 30, 2020, diluted earnings per share was calculated using the two-class method as the application of this method resulted in a more dilutive earnings per share for those periods.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

We have excluded certain convertible securities from the computation of diluted earnings per share because the inclusion of those securities would have been anti-dilutive for the periods presented. The following table presents the outstanding securities that were excluded from the computation of diluted earnings per share as of June 30, 2021 and 2020 (in thousands):


	Six Months Ended
	June 30, 2021		June 30, 2020
Common OP units	2,569	(1)	2,477
A-1 preferred OP units	703		300
A-3 preferred OP units	75		40

Aspen preferred OP units	395		1,284

Series C preferred OP units	340		310
Series D preferred OP units	391		489
Series E preferred OP units	62		90
Series F preferred OP units	56		90
Series G preferred OP units	155		—
Series H preferred OP units	355		—
Series I preferred OP units	562		—
Series J preferred OP units	145		—
Total Securities	5,808		5,080

(1) For the six months ended June 30, 2021, Common OP units were excluded from the computation of diluted earnings per share because the inclusion of those securities would have been anti-dilutive for the period.

14. Fair Value of Financial Instruments

Our financial instruments consist primarily of cash, cash equivalents and restricted cash, marketable securities, notes and other receivables, debt, and other liabilities. We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures, pursuant to ASC 820, "Fair Value Measurements and Disclosures." The following methods and assumptions were used in order to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

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

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

Level 2 - Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable (e.g. interest rates, yield curves, prepayment speeds, default rates, loss severity, etc.) in active markets or can be corroborated by observable market data; and

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

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Assets by Hierarchy Level

The table below sets forth our financial assets and liabilities (in thousands) that required disclosure of fair value on a recurring basis as of June 30, 2021. The table presents the carrying values and fair values of our financial instruments as of June 30, 2021 and December 31, 2020, that were measured using the valuation techniques described above. The table excludes other financial instruments such as other receivables and accounts payable as the carrying values associated with these instruments approximate their fair value since their maturities are less than one year. These are classified as Level 1 in the hierarchy.



	June 30, 2021
Financial Assets	Carrying Value		Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
Cash, cash equivalents and restricted cash	$	119,612	$	119,612	$	—	$	—	$	119,612
Marketable securities	153,049		153,049		—		—		153,049
Installment notes receivable on manufactured homes, net	82,506		—		—		82,506		82,506

Notes receivable from real estate developers	61,955		—		—		61,955		61,955
Total assets measured at fair value	$	417,122	$	272,661	$	—	$	144,461	$	417,122

Financial Liabilities
Mortgage term loans	$	3,418,097	$	—	$	3,418,097	$	—	$	3,472,066

Collateralized term loan	39,637		—		39,637		—		39,637
Total secured debt	3,457,734		—		3,457,734		—		3,511,703
Senior unsecured notes	591,688		—		591,688		—		601,630
Line of credit and other unsecured debt	261,753		—		261,753		—		261,753
Total unsecured debt	853,441		—		853,441		—		863,383
Other financial liabilities (contingent consideration)	18,101		—		—		18,101		18,101
Total liabilities measured at fair value	$	4,329,276	$	—	$	4,311,175	$	18,101	$	4,393,187



	December 31, 2020
Financial Assets	Carrying Value		Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
Cash, cash equivalents and restricted cash	$	92,641	$	92,641	$	—	$	—	$	92,641
Marketable securities	124,726		124,726		—		—		124,726
Installment notes receivable on manufactured homes, net	85,866		—		85,866		—		85,866

Notes receivable from real estate developers	52,638		—		52,638		—		52,638
Total assets measured at fair value	$	355,871	$	217,367	$	138,504	$	—	$	355,871

Financial Liabilities(a)
Mortgage term loans	$	3,444,967	$	—	$	3,444,967	$	—	$	3,543,885

Collateralized term loan	45,016		—		45,016		—		45,016
Total secured debt	3,489,983		—		3,489,983		—		3,588,901

Line of credit and other unsecured debt	1,267,093		—		1,267,093		—		1,267,093
Total unsecured debt	1,267,093		—		1,267,093		—		1,267,093
Other financial liabilities (contingent consideration)	15,842		—		—		15,842		15,842
Total liabilities measured at fair value	$	4,772,918	$	—	$	4,757,076	$	15,842	$	4,871,836

(a)Senior unsecured notes not included above as it was not issued until June 2021.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

We utilize fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The following methods and assumptions were used in order to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:

Cash, Cash Equivalents and Restricted Cash

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

Marketable Securities

Marketable securities held by us and accounted for under the ASC 321 "Investment Equity Securities" are measured at fair value. Any change in fair value is recognized in the Consolidated Statement of Operations in Remeasurement of marketable securities in accordance with ASU 2016-01 "Financial Instruments - Overall (Subtopic 825-10): Recognition and measurement of financial assets and financial liabilities." The fair value is measured by the quoted unadjusted share price which is readily available in active markets (Level 1).

The change in the marketable securities balance is as follows (in thousands):



	Six Months Ended		Year Ended
	June 30, 2021		December 31, 2020
Beginning Balance	$	124,725	$	94,727
Additional purchase	—		11,757
Change in fair value measurement	31,130		6,132
Foreign currency translation adjustment	(4,002)		10,138
Dividend reinvestment, net of tax	1,196		1,971

Ending Balance	$	153,049	$	124,725

Installment Notes Receivable on Manufactured Homes

Installment notes receivable on manufactured homes are recorded at fair value and are measured using model-derived indicative pricing using primarily unobservable inputs, inclusive of default rates, interest rates and recovery rates (Level 3). Refer to Note 4, "Notes and Other Receivables," for additional information.

Notes Receivable from Real Estate Developers

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

Secured Debt

Mortgage term loans - the fair value of mortgage term loans is based on the estimates of management and on rates currently quoted, rates currently prevailing for comparable loans and instruments of comparable maturities (Level 2). Refer to Note 8, "Debt and Line of Credit," for additional information.

Collateralized term loan - the fair value of the debt with variable rates approximates carrying value as the interest rates of these amounts approximate market rates. The estimated fair value of our indebtedness as of June 30, 2021 approximated its gross carrying value.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

Unsecured Debt

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

Line of credit and other unsecured debt - consists primarily of our New Credit Facility. We have variable rates on our New Credit Facility. The fair value of the debt with variable rates approximates carrying value as the interest rates of these amounts approximate market rates. The estimated fair value of our indebtedness as of June 30, 2021, approximated its gross carrying value.

Other Financial Liabilities

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

Level 3 Reconciliation, Measurements and Transfers

We review the fair value hierarchy classifications each reporting period. Changes in the observability of the valuation attributes may result in a reclassification of certain financial assets or liabilities. Such reclassifications are reported as transfers in and out of Level 3 at the beginning fair value for the reporting period in which the changes occur. Availability of secondary market activity and consistency of pricing from third-party sources impacts our ability to classify securities as Level 2 or Level 3.

Our assessment resulted in a net transfer into Level 3 of $138.5 million related to installment notes receivable on manufactured homes and notes from real estate developers during the six months ended June 30, 2021.

Inputs that are used to derive the fair value for installment notes receivables on manufactured homes and notes receivable from real estate developers transferred to Level 3 from Level 2 during the quarter ended March 31, 2021 as significant inputs used to value those instruments inclusive of default rates, interest rates, recovery rates, and counterparty performance rely heavily on internally sourced assumptions as opposed to observable market-based inputs.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

The following tables summarize changes to our financial instruments carried at fair value and classified within Level 3 of the fair value hierarchy for the three and six months ended June 30, 2021 (in thousands):


	Three Months Ended
	June 30, 2021
	Installment Notes Receivable on MH, net		Notes Receivable From Real Estate Developers		Other Liabilities (Contingent Consideration)
Level 3 beginning balance at March 31, 2021	$	84,109	$	58,286	$	18,156
Transfer to level 3	—		—		—
Transfer out of level 3	—		—		—
Net earnings	93		—		72
Purchases and issuances	2,721		4,348		238
Sales and settlements	(3,990)		(331)		—
Other adjustments	(427)		(348)		(365)
Level 3 ending balance at June 30, 2021	$	82,506	$	61,955	$	18,101


	Six Months Ended
	June 30, 2021
	Installment Notes Receivable on MH, net		Notes Receivable From Real Estate Developers		Other Liabilities (Contingent Consideration)
Level 3 beginning balance at December 31, 2020	$	—	$	—	$	15,842
Transfer to level 3	85,866		52,638		—
Transfer out of level 3	—		—		—
Net earnings	469		—		143
Purchases and issuances	3,933		11,140		3,439
Sales and settlements	(7,804)		(593)		—
Other adjustments	42		(1,230)		(1,323)
Level 3 ending balance at June 30, 2021	$	82,506	$	61,955	$	18,101

Although we have determined the estimated fair value amounts using available market information and commonly accepted valuation methodologies, considerable judgement is required in interpreting market data to develop fair value estimates. The fair value estimates are based on information available as of June 30, 2021. As such, our estimates of fair value could differ significantly from the actual carrying value.

15. Commitments and Contingencies

Legal Proceedings

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

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

16. Leases

Lessee Accounting

We lease land under non-cancelable operating leases at certain MH, RV and marina properties expiring at various dates through 2085. The majority of the leases have terms requiring fixed payments plus additional rents based on a percentage of revenues at those properties. We also have other operating leases, primarily office space and equipment expiring at various dates through 2026.

Future minimum lease payments under non-cancellable leases as of the six months ended June 30, 2021 where we are the lessee include:



Maturity of Lease Liabilities (in thousands)	Operating Leases		Finance Leases		Total
2021 (Excluding six months ended June 30, 2021)	$	3,905	$	154	$	4,059
2022	6,704		214		6,918
2023	6,733		197		6,930
2024	7,102		4,070		11,172
2025	7,093		—		7,093
Thereafter	98,166		—		98,166
Total Lease Payments	$	129,703	$	4,635	$	134,338
Less: Imputed interest	(51,962)		(309)		(52,271)
Present Value of Lease Liabilities	$	77,741	$	4,326	$	82,067

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


Description	Financial Statement Classification	As of June 30, 2021		As of December 31, 2020
Lease Assets
ROU asset obtained in exchange for new finance lease liabilities	Investment property, net	$	4,391	$	4,350
ROU asset obtained in exchange for new operating lease liabilities	Other assets, net	$	88,244	$	48,419
ROU asset obtained relative to below market operating lease	Other assets, net	$	27,238	$	27,614
Lease Liabilities
Finance lease liabilities	Other liabilities	$	4,326	$	4,334
Operating lease liabilities	Other liabilities	$	77,741	$	49,964

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


		Three Months Ended				Six Months Ended
Description	Financial Statement Classification	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Finance Lease Expense

Interest on lease liabilities	Interest expense	$	26	$	26	$	52	$	52
Operating lease cost	General and administrative expense, Property operating and maintenance	2,304		977		4,452		1,804
Variable lease cost	Property operating and maintenance	1,819		420		3,118		746
Short term lease cost	Property operating and maintenance	77		—		138		—
Total Lease Expense		$	4,226	$	1,423	$	7,760	$	2,602

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

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


	As of
Lease Term and Discount Rate	June 30, 2021
Weighted-average Remaining Lease Terms (years)
Finance lease	2.97
Operating lease	26.50
Weighted-average Discount Rate
Finance lease	2.44	%
Operating lease	3.84	%


	Six Months Ended
Other Information (in thousands)	June 30, 2021		June 30, 2020
Cash Paid for Amounts Included in The Measurement of Lease Liabilities
Operating cash flow from operating leases	$	2,402	$	1,147

Financing cash flow from finance leases	63		15
Total Cash Paid On Lease Liabilities	$	2,465	$	1,162

Lessor Accounting

We are not the lessor for any finance leases at our MH, RV or marina properties as of June 30, 2021.

Over 95 percent of our operating leases at our MH and RV properties where we are the lessor are either month to month or for a time period not to exceed one year. As of June 30, 2021, future minimum lease payments would not exceed 12 months.

Future minimum lease payments under non-cancellable leases at our marinas and RV properties as of the six months ended June 30, 2021 where we are the lessor include:


Maturity of Lease Payments (in thousands)	Operating Leases
2021 (Excluding six months ended June 30, 2021)	$	9,683
2022	15,583
2023	13,244
2024	8,230
2025	4,601
Thereafter	5,105
Total Undiscounted Cash Flows	$	56,446

The components of lease income were as follows (in thousands):


	Three Months Ended				Six Months Ended
Description	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Operating Leases

Fixed lease income	$	5,396	$	312	$	9,053	$	623
Variable lease income(1)	$	1,242	$	401	$	2,270	$	798

(1)Consists of rent primarily based on a percentage of revenues at the related properties.

SUN COMMUNITIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(Unaudited)

17. Recent Accounting Pronouncements

Recent Accounting Pronouncements - Not Yet Adopted

In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform" (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for accounting for contracts, hedging relationships, and other transactions affected by the reference rate reform, if certain criteria are met. The provisions of this standard are available for election through December 31, 2022. As of June 30, 2021, we do not expect the reference rate reform will have a material impact on our Consolidated Financial Statements as the majority of our debt is fixed.

In August 2020, the FASB issued ASU 2020-06, Debt - "Debt with Conversion and Other Options" (Subtopic 470-20) and "Derivatives and Hedging - Contracts in Entity's Own Equity" (Subtopic 815-40): "Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, "Debt: Debt with Conversion and Other Options," which requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer's own stock and classified in stockholders' equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, "Earnings Per Share," to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. We are currently evaluating the impact that ASU 2020-06 may have on our Consolidated Financial Statements and related disclosure.

18. Subsequent Events

Acquisitions

Subsequent to the quarter ended June 30, 2021, we acquired the following MH, RV and marina properties:

Property Name

Property Type

Sites, Wet Slips and Dry Storage Spaces

Development
Sites

City

State / Province

Total
Purchase Price
(in millions)

Allen Harbor

Marina

165

N/A

North Kingstown

4.0

Cisco Grove Campground & RV

407

Emigrant Gap

6.6

Four Leaf Portfolio(1)

2,714

171

Various

MI / IN

215.0

Harborage Yacht Club

Marina

300

N/A

Stuart

22.0

Total Subsequent Acquisitions

3,197

578

247.6

(1)Contains nine MH communities.

Dispositions

On July 2, 2021, we closed on a sale of two MH communities located in Anderson, IN and O'Fallon, MO, containing 175 and 502 sites, respectively, for $67.5 million. The assets and liabilities associated with the transaction were classified as held-for-sale on the Consolidated Balance Sheets as of June 30, 2021.

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

SUN COMMUNITIES, INC.

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

The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes, along with our 2020 Annual Report.

OVERVIEW

We are a fully integrated, self-administered and self-managed REIT. As of June 30, 2021, we owned and operated or held an interest in a portfolio of 569 developed properties located in 39 states throughout the U.S. and one province in Canada, including 278 MH communities, 143 RV resorts, 34 properties containing both MH and RV sites, and 114 marinas. We have been in the business of acquiring, operating, developing and expanding MH communities and RV resorts since 1975 and marinas since 2020. We lease individual sites with utilities access for placement of manufactured homes, RVs or boats to our customers. We are also engaged in the marketing, selling and leasing of new and pre-owned homes to current and future residents in our MH communities. The rental program operations within our MH communities support and enhance our occupancy levels, property performance, and cash flows.

COVID-19 IMPACT

As of June 30, 2021, there are no government regulations preventing the operations of any of our MH communities, RV resorts or marinas. The border for recreational travel between the United States and Canada remains closed, which could impact cross border traffic to resorts and marinas across the United States and Canada. The execution of our operational and financial plans has helped to mitigate the impact of COVID-19 on our business.

We continue to provide essential services using social distancing techniques and minimal contact. To promote social distancing, we are encouraging our residents to use our online rent payment portals and other payment methods. We continue to implement numerous health and safety measures at our communities and our main office to keep team members safe. These measures include increased cleaning and sanitation of shared spaces and social distancing protocols throughout our footprint. We closely monitor and track orders by federal, state and local authorities and hold regular status calls with our operations and main office leadership teams. We have implemented and continue to encourage remote working arrangements, wherever possible, to keep our team members safe and to do our part to promote social distancing.

We remain committed to assisting individuals who are in the process of leasing a site, a wet slip, a dry storage space, or purchasing a home, while maintaining health and safety protocols including following strict social distancing. Virtual viewings of homes are being utilized to avoid or minimize contact.

The extent to which the COVID-19 pandemic impacts our operations, financial condition and financial results will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. The uncertainty of this situation precludes any prediction as to the full impact of the COVID-19 pandemic.

SIGNIFICANT ACCOUNTING POLICIES

We have identified significant accounting policies that, as a result of the judgments, uncertainties and complexities of the underlying accounting standards and operations involved could result in material changes to our financial condition or results of operations under different conditions or using different assumptions. Details regarding significant accounting policies are described fully in our 2020 Annual Report.

SUN COMMUNITIES, INC.

NON-GAAP FINANCIAL MEASURES

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

NOI is derived from operating revenues minus property operating expenses and real estate taxes. NOI is a non-GAAP financial measure that we believe is helpful to investors as a supplemental measure of operating performance because it is an indicator of the return on property investment and provides a method of comparing property performance over time. We use NOI as a key measure when evaluating performance and growth of particular properties and / or groups of properties. The principal limitation of NOI is that it excludes depreciation, amortization, interest expense and non-property specific expenses such as general and administrative expenses, all of which are significant costs. Therefore, NOI is a measure of the operating performance of our properties rather than of the Company overall.

We believe that GAAP net income (loss) is the most directly comparable measure to NOI. NOI should not be considered to be an alternative to GAAP net income (loss) as an indication of our financial performance or GAAP cash flow from operating activities as a measure of our liquidity; nor is it indicative of funds available for our cash needs, including our ability to make cash distributions. Because of the inclusion of items such as interest, depreciation and amortization, the use of GAAP net income (loss) as a performance measure is limited as these items may not accurately reflect the actual change in market value of a property, in the case of depreciation and in the case of interest, may not necessarily be linked to the operating performance of a real estate asset, as it is often incurred at a parent company level and not at a property level.

FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT") as GAAP net income (loss), excluding gains (or losses) from sales of depreciable operating property, plus real estate related depreciation and amortization, real estate related impairments, 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 our operating performance. By excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared period-over-period, reflects the impact to operations from trends in occupancy rates, rental rates, and operating costs, providing perspective not readily apparent from GAAP net income (loss). Management believes 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. We also use FFO excluding certain gain and loss items that management considers unrelated to the operational and financial performance of our core business ("Core FFO"). We believe that Core FFO provides enhanced comparability for investor evaluations of period-over-period results.

We believe that GAAP net income (loss) is the most directly comparable measure to FFO. The principal limitation of FFO is that it does not replace GAAP net income (loss) as a performance measure or GAAP cash flow from operations as a liquidity measure. Because FFO excludes significant economic components of GAAP net income (loss) including depreciation and amortization, FFO should be used as a supplement to GAAP net income (loss) and not as an alternative to it. Further, 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 is calculated in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that interpret the NAREIT definition differently.

SUN COMMUNITIES, INC.

RESULTS OF OPERATIONS

The following tables reconcile the Net income attributable to Sun Communities, Inc. common stockholders to NOI and summarize our consolidated financial results for the three and six months ended June 30, 2021 and 2020 (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Net Income Attributable to Sun Communities, Inc. Common Stockholders	$	110,770	$	58,910	$	135,552	$	42,824
Interest income	(2,719)		(2,635)		(5,350)		(4,985)
Brokerage commissions and other revenues, net	(6,939)		(3,274)		(12,899)		(7,187)
General and administrative expense	45,127		26,527		83,330		51,876
Catastrophic event-related charges, net	355		(566)		2,769		40
Business combination expense, net	(201)		—		1,031		—
Depreciation and amortization	126,423		87,265		249,727		170,954

Loss on extinguishment of debt (see Note 8)	8,108		1,930		8,108		5,209
Interest expense	37,681		31,428		77,198		63,844
Interest on mandatorily redeemable preferred OP units / equity	1,041		1,042		2,077		2,083
(Gain) / loss on remeasurement of marketable securities (see Note 14)	(27,494)		(24,519)		(31,155)		4,128
(Gain) / loss on foreign currency translation	264		(10,374)		239		7,105

Other expense, net	660		821		1,759		1,793
(Gain) / loss on remeasurement of notes receivable (see Note 4)	(93)		(246)		(469)		1,866
Income from nonconsolidated affiliates (see Note 6)	(794)		(92)		(1,965)		(144)
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates (see Note 6)	115		(1,132)		11		1,059
Current tax expense (see Note 12)	1,245		119		1,016		569
Deferred tax benefit / (expense) (see Note 12)	66		(112)		(81)		(242)
Preferred return to preferred OP units / equity	3,035		1,584		5,899		3,154
Income attributable to noncontrolling interests	7,044		2,861		7,339		1,899


NOI	$	303,694	$	169,537	$	524,136	$	345,845


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Real Property NOI	$	252,742	$	162,600	$	457,394	$	333,939
Home Sales NOI	23,085		6,479		33,694		13,027

Service, retail, dining and entertainment NOI	27,867		458		33,048		(1,121)

NOI	$	303,694	$	169,537	$	524,136	$	345,845

SUN COMMUNITIES, INC.

Seasonality of revenue

We evaluate segment operating performance based on NOI. The RV and marina industries are cyclical and seasonal in nature, and the results of operations in any one period may not be indicative of results in future periods.

In the RV market, certain properties maintain higher occupancy during the summer months, while other properties maintain higher occupancy during the winter months. The RV market typically shows a decline in demand over the winter months, yet usually produces higher growth in the spring and summer months due to higher use by vacationers. Real property - transient revenue is included in the RV segment revenue. As of June 30, 2021, we recognized 12.2 percent of the annual expected Real property - transient revenue in the first quarter, 28.1 percent in the second quarter, and expect to recognize 45.8 percent in the third quarter and 13.9 percent in the fourth quarter. Final percentages will not be known and disclosed until year end. Real property - transient revenue was approximately $134.7 million for the year ended December 31, 2020. In 2020, Real property - transient was recognized 18.8 percent in the first quarter, 15.6 percent in the second quarter, 44.9 percent in the third quarter and 20.7 percent in the fourth quarter.

In the marina market, demand for wet slip storage increases during the summer months as customers contract for the summer boating season, which also drives non-storage revenue streams such as service, fuel and on-premise restaurants or convenience storage. Demand for dry storage increases during the winter season as seasonal weather patterns require boat owners to store their vessels on dry docks and within covered racks. As of June 30, 2021, we recognized 18.9 percent of the expected seasonal Real property revenue in the first quarter, 26.6 percent in the second quarter, and expect to recognize 28.8 percent in the third quarter and 25.7 percent in the fourth quarter. Final percentages will not be known and disclosed until year end.

SUN COMMUNITIES, INC.

Comparison of the three and six months ended June 30, 2021 and 2020

Real Property Operations - Total Portfolio

The following tables reflect certain financial and other information for our Total Portfolio as of and for the three and six months ended June 30, 2021 and 2020 (in thousands, except for statistical information):


	Three Months Ended								Six Months Ended
	June 30, 2021		June 30, 2020(1)		Change		% Change		June 30, 2021		June 30, 2020(1)		Change		% Change
Financial Information
Revenue


Real property (excluding Transient)	$	290,129	$	207,869	$	82,260	39.6	%	$	558,895	$	415,055	$	143,840	34.7	%
Real property - transient	76,998		25,715		51,283		199.4	%	109,534		56,061		53,473		95.4	%
Other	38,778		17,543		21,235		121.0	%	68,089		38,360		29,729		77.5	%
Total Operating	405,905		251,127		154,778		61.6	%	736,518		509,476		227,042		44.6	%
Expense






Property Operating	153,163		88,527		64,636		73.0	%	279,124		175,537		103,587		59.0	%
Real Property NOI	$	252,742	$	162,600	$	90,142	55.4	%	$	457,394	$	333,939	$	123,455	37.0	%

(1)Canadian currency figures included within the three and six months ended June 30, 2021 have been translated at the 2021 average exchange rates.


	As of
	June 30, 2021			June 30, 2020				Change
Other Information
Number of properties(1)	569			426				143

MH occupancy	96.7		%
RV occupancy(2)	100.0		%
MH & RV blended occupancy(3)	97.4		%	97.3		%		0.1		%

Adjusted MH occupancy(4)	97.8		%
Adjusted RV occupancy(5)	100.0		%
Adjusted MH & RV occupancy(6)	98.3		%	98.6		%		(0.3)		%

Sites available for MH & RV development	9,443			9,742				(299)

Monthly base rent per site - MH	$	598		$	584		(8)	$	14
Monthly base rent per site - RV(7)	$	519		$	503		(8)	$	16
Monthly base rent per site - Total	$	580		$	566		(8)	$	14

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

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

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

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

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

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

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

(8)Canadian currency figures included within the three months ended June 30, 2020 have been translated at 2021 average exchange rates.

For the three months ended June 30, 2021, the $90.1 million increase in Real Property NOI consists of $34.5 million from Same Communities as detailed below, $41.6 million from the Marinas and $14.0 million from recently acquired properties as compared to the same period in 2020.

The $123.5 million increase in Real Property NOI consists of $39.0 million from Same Communities as detailed below, $66.6 million from marinas and $17.9 million from recently acquired properties in the six months ended June 30, 2021 as compared to the same period in 2020.

SUN COMMUNITIES, INC.

Real Property Operations - Same Community

A key management tool used when evaluating performance and growth of our properties is a comparison of our Same Communities. The Same Communities data includes all properties which we have owned and operated continuously since January 1, 2020, exclusive of properties recently completed or under construction, and other properties as determined by management. The Same Community data may change from time-to-time depending on acquisitions, dispositions, management discretion, significant transactions or unique situations. In order to evaluate the growth of the Same Communities, management has classified certain items differently than our GAAP statements. The reclassification difference between our GAAP statements and our Same Community portfolio is the reclassification of utility revenues from Real property revenue to operating expenses. A significant portion of our utility charges are re-billed to our residents.

The following tables reflect certain financial and other information for our Same Communities as of and for the three and six months ended June 30, 2021 and 2020 (in thousands, except for statistical information).


	Three Months Ended
	Total Same Community								MH								RV
	June 30, 2021		June 30, 2020		Change		% Change		June 30, 2021		June 30, 2020		Change		% Change		June 30, 2021		June 30, 2020		Change		% Change
Financial Information
Revenue
Real property (excluding Transient)	$	219,693	$	205,449	$	14,244	6.9	%	$	174,158	$	166,473	$	7,685	4.6	%	$	45,535	$	38,976	$	6,559	16.8	%
Real property - transient	51,481		21,510		29,971		139.3	%	362		173		189		109.2	%	51,119		21,337		29,782		139.6	%
Other	10,798		3,219		7,579		235.4	%	4,869		1,130		3,739		330.9	%	5,929		2,089		3,840		183.8	%
Total Operating	281,972		230,178		51,794		22.5	%	179,389		167,776		11,613		6.9	%	102,583		62,402		40,181		64.4	%
Expense








Property Operating	87,459		70,159		17,300		24.7	%	44,984		40,226		4,758		11.8	%	42,475		29,933		12,542		41.9	%
Real Property NOI	$	194,513	$	160,019	$	34,494	21.6	%	$	134,405	$	127,550	$	6,855	5.4	%	$	60,108	$	32,469	$	27,639	85.1	%


	Six Months Ended
	Total Same Community								MH								RV
	June 30, 2021		June 30, 2020		Change		% Change		June 30, 2021		June 30, 2020		Change		% Change		June 30, 2021		June 30, 2020		Change		% Change
Financial Information
Revenue
Real property (excluding Transient)	$	435,054	$	410,667	$	24,387	5.9	%	$	346,900	$	331,301	$	15,599	4.7	%	$	88,154	$	79,366	$	8,788	11.1	%
Real property - transient	76,883		49,869		27,014		54.2	%	962		1,101		(139)		(12.6)	%	75,921		48,768		27,153		55.7	%
Other	17,793		9,071		8,722		96.2	%	9,695		4,940		4,755		96.3	%	8,098		4,131		3,967		96.0	%
Total Operating	529,730		469,607		60,123		12.8	%	357,557		337,342		20,215		6.0	%	172,173		132,265		39,908		30.2	%
Expense








Property Operating	159,973		138,879		21,094		15.2	%	87,989		80,911		7,078		8.7	%	71,984		57,968		14,016		24.2	%
Real Property NOI	$	369,757	$	330,728	$	39,029	11.8	%	$	269,568	$	256,431	$	13,137	5.1	%	$	100,189	$	74,297	$	25,892	34.8	%

SUN COMMUNITIES, INC.


	As of
	June 30, 2021			June 30, 2020				Change
Other Information
Number of properties	405			405				—

MH occupancy	97.4		%
RV occupancy(1)	100.0		%
MH & RV blended occupancy(2)	98.0		%

Adjusted MH occupancy(3)	98.5		%
Adjusted RV occupancy(4)	100.0		%
Adjusted MH & RV blended occupancy(5)	98.8		%	97.2		%	(6)	1.6		%

Sites available for development	7,246			7,553				(307)

Monthly base rent per site - MH	$	601		$	583		(8)	$	18
Monthly base rent per site - RV(7)	$	527		$	504		(8)	$	23
Monthly base rent per site - Total	$	584		$	565		(8)	$	19

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

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

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

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

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

(6)The occupancy percentages for 2020 have been adjusted to reflect incremental growth period-over-period from newly rented MH expansion sites and the conversion of transient RV sites to annual RV sites.

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

(8)Canadian currency figures included within three months ended June 30, 2020 have been translated at 2021 average exchange rates.

The amounts in the table above reflect constant currency for comparative purposes. We have reclassified water and sewer revenues of $16.8 million and $14.3 million for the three months ended June 30, 2021 and 2020, and $33.2 million and $29.1 million for the six months ended June 30, 2021 and 2020, to reflect the utility expenses associated with our Same Community portfolio net of recovery.

For the three months ended June 30, 2021 and 2020:

The Total Same Community $34.5 million, or 21.6 percent, growth in NOI is attributable to the RV segment $27.6 million, or 85.1 percent, increase in NOI and the MH segment $6.9 million, or 5.4 percent, growth in NOI.

The RV segment $27.6 million, or 85.1 percent, increase in NOI is primarily due to an increase in Real property - transient revenue of $29.8 million, or 139.6 percent, when compared to the same period in 2020 which was impacted by the required closure, or delayed opening, of over 40 of our RV resorts due to the COVID-19 pandemic.

The MH segment $6.9 million, or 5.4 percent, growth in NOI is primarily due to an increase in Real property (excluding transient) revenue of $7.7 million, or 4.6 percent, when compared to the same period in 2020. The MH property (excluding transient) revenue increased due to a 3.1 percent increase in monthly based rent and a 1.6 percent increase in Occupancy.

For the six months ended June 30, 2021 and 2020:

The Total Same Community $39.0 million, or 11.8 percent, growth in NOI is attributable to the RV segment $25.9 million, or 34.8 percent increase in NOI and the MH segment $13.1 million, or 5.1 percent, growth in NOI.

The RV segment $25.9 million, or 34.8 percent, increase in NOI is primarily due to an increase in Real property - transient revenue of $27.2 million, or 55.7 percent. The results of the comparative 2020 period were impacted by the required closure, or delayed opening, of over 40 of our RV resorts due to the COVID-19 pandemic.

The MH segment $13.1 million, or 5.1 percent, growth in NOI is primarily due to an increase in Real property (excluding transient) revenue of $15.6 million, or 4.7 percent. The Real property (excluding transient) revenue increased due to a 3.1 percent increase in monthly base rent per MH site when compared to the same period in 2020, and a 1.6 percent increase in occupancy.

SUN COMMUNITIES, INC.

Marinas Summary

The following table reflects certain financial and other information for our marinas as of and for the three and six months ended June 30, 2021 (in thousands, except for statistical information):


	Three Months Ended		Six Months Ended
	June 30, 2021		June 30, 2021
Financial Information
Revenues
Real property (excluding Transient)	$	61,914	$	108,020
Real property - transient	4,257		5,125
Other	3,671		5,319
Total Operating	69,842		118,464
Expenses
Property Operating(a)	28,246		51,821
Real Property NOI	41,596		66,643
Service, retail, dining and entertainment
Service, retail, dining and entertainment revenue	82,238		126,592
Service, retail, dining and entertainment expense	61,017		99,026
Service, Retail, Dining and Entertainment NOI	21,221		27,566

Marina NOI	$	62,817	$	94,209

			As of
Other Information - Marinas			June 30, 2021
Number of properties(b)			114


Total wet slips and dry storage			41,275

(a) Marina results net $3.7 million and $6.3 million of certain utility revenue against the related utility expense in property operating and maintenance expense for three and six months ended June 30, 2021.

(b) Marina properties comprised of eight properties acquired in 2021 and 106 properties acquired in 2020.

SUN COMMUNITIES, INC.

Home Sales Summary

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

The following table reflects certain financial and statistical information for our Home Sales Program for the three and six months ended June 30, 2021 and 2020 (in thousands, except for average selling prices and statistical information):


	Three Months Ended											Six Months Ended
	June 30, 2021			June 30, 2020			Change			% Change		June 30, 2021			June 30, 2020			Change			% Change
Financial Information
New Homes
New home sales	$	34,761		$	19,206		$	15,555		81.0	%	$	57,733		$	34,802		$	22,931		65.9	%
New home cost of sales	28,269			15,707			12,562			80.0	%	46,943			28,317			18,626			65.8	%
Gross Profit – new homes	6,492			3,499			2,993			85.5	%	10,790			6,485			4,305			66.4	%
Gross margin % – new homes	18.7		%	18.2		%	0.5		%			18.7		%	18.6		%	0.1		%
Average selling price – new homes	$	153,132		$	137,186		$	15,946		11.6	%	$	153,545		$	134,371		$	19,174		14.3	%

Pre-owned Homes
Pre-owned home sales	$	47,087		$	19,324		$	27,763		143.7	%	$	76,314		$	44,315		$	31,999		72.2	%
Pre-owned home cost of sales	25,945			13,474			12,471			92.6	%	44,529			30,896			13,633			44.1	%
Gross Profit – pre-owned homes	21,142			5,850			15,292			261.4	%	31,785			13,419			18,366			136.9	%
Gross margin % – pre-owned homes	44.9		%	30.3		%	14.6		%			41.7		%	30.3		%	11.4		%
Average selling price – pre-owned homes	$	50,577		$	41,028		$	9,549		23.3	%	$	47,195		$	39,744		$	7,451		18.7	%

Total Home Sales
Revenue from home sales	$	81,848		$	38,530		$	43,318		112.4	%	$	134,047		$	79,117		$	54,930		69.4	%
Cost of home sales	54,214			29,181			25,033			85.8	%	91,472			59,213			32,259			54.5	%
Home selling expenses	4,549			2,870			1,679			58.5	%	8,881			6,877			2,004			29.1	%
Home Sales NOI	$	23,085		$	6,479		$	16,606		256.3	%	$	33,694		$	13,027		$	20,667		158.6	%

Statistical Information
New home sales volume	227			140			87			62.1	%	376			259			117			45.2	%
Pre-owned home sales volume	931			471			460			97.7	%	1,617			1,115			502			45.0	%
Total home sales volume	1,158			611			547			89.5	%	1,993			1,374			619			45.1	%

Gross Profit - New Homes

For the three months ended June 30, 2021, the $3.0 million, or 85.5 percent, increase in gross profit is primarily the result of a 62.1 percent increase in new home sales volume coupled with a 11.6 percent increase in the new home average selling price, as compared to the same period in 2020.

For the six months ended June 30, 2021, the $4.3 million, or 66.4 percent, increase in gross profit is primarily the result of a 45.2 percent increase in new home sales volume coupled with a 14.3 percent increase in the new home average selling price, as compared to the same period in 2020.

Gross Profit - Pre-owned Homes

For the three months ended June 30, 2021, the $15.3 million, or 261.4 percent, increase in gross profit is primarily the result of a 97.7 percent increase in pre-owned home sales volume, coupled with a 14.6 percent increase in gross margin, primarily due to a 23.3 percent increase in the pre-owned home average selling price, as compared to the same period in 2020.

For the six months ended June 30, 2021, the $18.4 million, or 136.9 percent, increase in gross profit is primarily the result of a 45.0 percent increase in pre-owned home sales volume, coupled with a 11.4 percent increase in gross margin, primarily due to a 18.7 percent increase in the pre-owned home average selling price, as compared to the same period in 2020.

SUN COMMUNITIES, INC.

Homes sales NOI

For the three months ended June 30, 2021, the $16.6 million, or 256.3 percent, increase in NOI is primarily the result of a 89.5 percent increase in home sales volume coupled with increase in home average selling price, as compared to the same period in 2020.

For the six months ended June 30, 2021, the $20.7 million, or 158.6 percent, increase in NOI is primarily the result of a 45.1 percent increase in home sales volume coupled with increase in home average selling price, as compared to the same period in 2020.

SUN COMMUNITIES, INC.

Rental Program Summary

The following table reflects certain financial and other information for our Rental Program as of and for the three and six months ended June 30, 2021 and 2020 (in thousands, except for other information):


	Three Months Ended								Six Months Ended
	June 30, 2021		June 30, 2020		Change		% Change		June 30, 2021		June 30, 2020		Change		% Change
Financial Information
Revenues
Home rent	$	17,060	$	14,968	$	2,092	14.0	%	$	34,082	$	30,436	$	3,646	12.0	%
Site rent	18,649		18,591		58		0.3	%	37,766		36,598		1,168		3.2	%
Total	35,709		33,559		2,150		6.4	%	71,848		67,034		4,814		7.2	%

Expenses



Rental Program operating and maintenance	4,561		4,425		136		3.1	%	9,785		9,248		537		5.8	%
Rental Program NOI	$	31,148	$	29,134	$	2,014	6.9	%	$	62,063	$	57,786	$	4,277	7.4	%

Other Information
Number of sold rental homes	281		122		159		130.3	%	492		356		136		38.2	%
Number of occupied rentals, end of period									10,951		11,785		(834)		(7.1)	%
Investment in occupied rental homes, end of period									$	601,798	$	621,327	$	(19,529)	(3.1)	%
Weighted average monthly rental rate, end of period									$	1,076	$	1,018	$	58	5.7	%

The Rental Program NOI is included in Real Property NOI. The Rental Program NOI is separately reviewed to assess the overall growth and performance of the Rental Program and its financial impact on the Company's operations.

For the three months ended June 30, 2021, Rental Program NOI increased $2.0 million, or 6.9 percent as compared to the same period in 2020. The increase is primarily due to an increase in Rental Program revenue of $2.2 million, or 6.4 percent, offset by an increase of 3.1 percent in expenses.

For the six months ended June 30, 2021, Rental Program NOI increased $4.3 million, or 7.4 percent as compared to the same period in 2020. The increase is primarily due to an increase in Rental Program revenue of $4.8 million, or 7.2 percent, due to a 5.7 percent increase in the weighted average monthly rental rate and a 38.2 percent increase in the number of homes rented.

SUN COMMUNITIES, INC.

Other Items - Statements of Operations(1)

The following table summarizes other income and expenses for the three and six months ended June 30, 2021 and 2020 (in thousands):


	Three Months Ended								Six Months Ended
	June 30, 2021		June 30, 2020		Change		% Change		June 30, 2021		June 30, 2020		Change		% Change
Service, retail, dining and entertainment, net	$	27,867	$	458	$	27,409	N/M		$	33,048	$	(1,121)	$	34,169	N/M
Interest income	$	2,719	$	2,635	$	84	3.2	%	$	5,350	$	4,985	$	365	7.3	%
Brokerage commissions and other, net	$	6,939	$	3,274	$	3,665	111.9	%	$	12,899	$	7,187	$	5,712	79.5	%
General and administrative expense	$	45,127	$	26,527	$	18,600	70.1	%	$	83,330	$	51,876	$	31,454	60.6	%
Catastrophic event-related charges, net	$	355	$	(566)	$	921	162.7	%	$	2,769	$	40	$	2,729	N/M
Business combination expense, net	$	(201)	$	—	$	(201)	N/A		$	1,031	$	—	$	1,031	N/A
Depreciation and amortization	$	126,423	$	87,265	$	39,158	44.9	%	$	249,727	$	170,954	$	78,773	46.1	%
Loss on extinguishment of debt (see Note 8)	$	8,108	$	1,930	$	6,178	320.1	%	$	8,108	$	5,209	$	2,899	55.7	%
Interest expense	$	37,681	$	31,428	$	6,253	19.9	%	$	77,198	$	63,844	$	13,354	20.9	%
Interest on mandatorily redeemable preferred OP units / equity	$	1,041	$	1,042	$	(1)	(0.1)	%	$	2,077	$	2,083	$	(6)	(0.3)	%
Gain / (loss) on remeasurement of marketable securities (see Note 14)	$	27,494	$	24,519	$	2,975	12.1	%	$	31,155	$	(4,128)	$	35,283	854.7	%
Gain / (loss) on foreign currency translation	$	(264)	$	10,374	$	(10,638)	(102.5)	%	$	(239)	$	(7,105)	$	6,866	(96.6)	%

Other expense, net	$	(660)	$	(821)	$	161	(19.6)	%	$	(1,759)	$	(1,793)	$	34	(1.9)	%
Gain / (loss) on remeasurement of notes receivable (see Note 4)	$	93	$	246	$	(153)	62.2	%	$	469	$	(1,866)	$	2,335	125.1	%
Income from nonconsolidated affiliates (see Note 6)	$	794	$	92	$	702	763.0	%	$	1,965	$	144	$	1,821	N/M
Gain / (loss) on remeasurement of investment in nonconsolidated affiliates (see Note 6)	$	(115)	$	1,132	$	(1,247)	(110.2)	%	$	(11)	$	(1,059)	$	1,048	(99.0)	%
Current tax expense (see Note 12)	$	(1,245)	$	(119)	$	(1,126)	N/M		$	(1,016)	$	(569)	$	(447)	78.6	%
Deferred tax benefit / (expense) (see Note 12)	$	(66)	$	112	$	(178)	(158.9)	%	$	81	$	242	$	(161)	(66.5)	%
Preferred return to preferred OP units / equity	$	3,035	$	1,584	$	1,451	91.6	%	$	5,899	$	3,154	$	2,745	87.0	%
Income attributable to noncontrolling interests	$	7,044	$	2,861	$	4,183	146.2	%	$	7,339	$	1,899	$	5,440	286.5	%

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

N/M = Percentage change is not meaningful.

Service, retail, dining and entertainment, net - for the three and six months ended June 30, 2021, increased primarily due to the addition of service revenue from the Safe Harbor marina acquisition.

Brokerage commissions and other, net - for the three and six months ended June 30, 2021, increased primarily due to an increase in brokerage commissions as a result of an increase in the number of brokered home sales, as compared to 2020.

General and administrative expenses - for the three and six months ended June 30, 2021, increased primarily due to an increase in wages and incentives driven by growth in strategic initiatives and acquisition activity as compared to the same period in 2020.

Catastrophic event-related charges, net - for the three and six months ended June 30, 2021, increased primarily due to fire damages and the impact of named weather events.

Depreciation and amortization - for the three and six months ended June 30, 2021, increased as a result of property acquisitions during 2020 and 2021. Refer to Note 3, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated Financial Statements for additional information.

SUN COMMUNITIES, INC.

Loss on extinguishment of debt - for the three and six months ended June 30, 2021, increased primarily due to the termination of the Safe Harbor line of credit and financing activities as compared to the same period in 2020. Refer to Note 8, "Debt and Line of Credit," in our accompanying Consolidated Financial Statements for additional information.

Interest expense - for the three and six months ended June 30, 2021, increased primarily due to the higher carrying balance on the Safe Harbor prior line of credit as compared to the same period in 2020. The Safe Harbor line of credit was terminated in June 2021. Refer to Note 8, "Debt and Line of Credit," of our accompanying Consolidated Financial Statements for additional information.

Gain / (loss) on remeasurement of marketable securities - for the three and six months ended June 30, 2021 was the reflection of increase / (decrease) of publicly traded marketable securities. Refer to Note 14, "Fair Value of Financial Instruments," in our accompanying Consolidated Financial Statements for additional information.

Gain / (loss) on foreign currency translation - for the three months ended June 30, 2021, was a $0.3 million gain as compared to a $10.4 million loss in the same period in 2020, primarily due to fluctuations in exchange rates on Canadian and Australian denominated currencies. For the six months ended June 30, 2021, there was a $0.2 million loss as compared to a $7.1 million loss in the same period in 2020.

Income / (loss) on remeasurement of notes receivable - represents the change in fair value of our in-house financing notes receivable portfolio, for which we elected the fair value option on January 1, 2020. Refer to Note 4, "Notes and Other Receivables," and Note 14, "Fair Value of Financial Instruments," in our accompanying Consolidated Financial Statements for additional information.

Income / (loss) on remeasurement of investment in nonconsolidated affiliates - represents the adjustment of our equity investment in GTSC, for which we elected the fair value option on January 1, 2020. Refer to Note 6, "Investment in Nonconsolidated Affiliates," in our accompanying Consolidated Financial Statements for additional information.

Preferred return to preferred OP units / equity - for the three and six months ended June 30, 2021, increased primarily as a result of the volume of preferred OP units issued in conjunction with various acquisitions since 2020. Refer to Note 3, "Real Estate Acquisitions and Dispositions," and Note 9, "Equity and Temporary Equity," of our accompanying Consolidated Financial Statements for additional information.

Income attributable to noncontrolling interests - for the three months ended June 30, 2021, increased as compared to the same period in 2020, primarily due to improved financial performance of the Company and its consolidated VIEs. Refer to Note 7, "Consolidated Variable Interest Entities," in our accompanying Consolidated Financial Statements for additional information.

Current tax expense - for the three and six months ended June 30, 2021, increased as compared to the same periods in 2020, primarily due to improved financial performance of the Company and its consolidated VIEs and change in the quarterly tax allocation process. Refer to Note 12, "Income Taxes," in our accompanying Consolidated Financial Statements for additional information.

SUN COMMUNITIES, INC.

Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to FFO

The following table reconciles Net income attributable to Sun Communities, Inc. common stockholders to FFO for the three and six months ended June 30, 2021 and 2020 (in thousands, except per share amounts):


	Three Months Ended				Six Months Ended
	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Net Income Attributable to Sun Communities, Inc. Common Stockholders	$	110,770	$	58,910	$	135,552	$	42,824
Adjustments
Depreciation and amortization	126,227		87,296		249,303		171,048
Depreciation on nonconsolidated affiliates	31		19		61		19
(Gain) / loss on remeasurement of marketable securities	(27,494)		(24,519)		(31,155)		4,128
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates	115		(1,132)		11		1,059
(Gain) / loss on remeasurement of notes receivable	(93)		(246)		(469)		1,866
Income attributable to noncontrolling interests	5,033		1,942		4,886		1,646
Preferred return to preferred OP units	478		—		958		1,000
Interest expense on Aspen preferred OP units	514		—		1,028		—




Gain on disposition of assets, net	(17,564)		(4,178)		(25,719)		(9,740)
FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities(1)	198,017		118,092		334,456		213,850

Adjustments

Business combination expense and other acquisition related costs(2)	2,284		504		4,237		889

Loss on extinguishment of debt	8,108		1,930		8,108		5,209

Catastrophic event-related charges, net	364		(567)		2,778		39
Loss of earnings - catastrophic event-related(3)	—		—		200		300

(Gain) / loss on foreign currency translation	264		(10,374)		239		7,105
Other expense, net	517		552		1,233		854
Deferred tax (benefits) / expenses	66		188		(81)		58








Core FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities(1)	$	209,620	$	110,325	$	351,170	$	228,304

Weighted average common shares outstanding - basic	112,082		95,859		110,007		94,134
Add

Common stock issuable upon conversion of stock options	—		1		—		1
Restricted stock	580		305		372		390
Common OP units	2,577		2,448		2,586		2,430

Common stock issuable upon conversion of certain preferred OP units	1,174		—		1,180		815






Weighted Average Common Shares Outstanding - Fully Diluted	116,413		98,613		114,145		97,770

FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities Per Share - Fully Diluted	$	1.70	$	1.20	$	2.93	$	2.19

Core FFO Attributable to Sun Communities, Inc. Common Stockholders and Dilutive Convertible Securities Per Share - Fully Diluted	$	1.80	$	1.12	$	3.08	$	2.34

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

(2)These costs represent business combination expenses and expenses incurred to bring recently acquired properties up to our operating standards, including items such as tree trimming and painting costs that do not meet our capitalization policy.

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

SUN COMMUNITIES, INC.

LIQUIDITY AND CAPITAL RESOURCES

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

Subject to market conditions, we intend to continue to identify opportunities to expand our development pipeline and acquire existing properties. We finance acquisitions through available cash, secured financing, draws on our line of credit, the assumption of existing debt on properties and the issuance of equity securities. We will continue to evaluate acquisition opportunities that meet our criteria. Refer to Note 3, "Real Estate Acquisitions and Dispositions," in the accompanying Consolidated Financial Statements for information regarding recent property acquisitions.

We also intend to continue to strengthen our capital and liquidity positions by focusing on our core fundamentals, which are generating positive cash flows from operations, maintaining appropriate debt levels and leverage ratios, and controlling overhead costs. We intend to meet our liquidity requirements through available cash balances, cash flows generated from operations, draws on our line of credit, and the use of debt and equity offerings under our shelf registration statement. Refer to Note 8, "Debt and Line of Credit," and Note 9, "Equity and Temporary Equity," in the accompanying Consolidated Financial Statements for additional information.

Capital Expenditures - MH, RV and Marinas

Our capital expenditures include expansion sites and development construction costs, lot modifications, recurring capital expenditures and rental home purchases.

Expansion and development activities costs of $90.4 million and $127.1 million, were completed for the six months ended June 30, 2021 and 2020, respectively. Expansion and development expenditures consist primarily of construction costs and costs necessary to complete home and RV site improvements, such as driveways, sidewalks and landscaping at our MH communities and RV resorts.

Lot modification expenditures were $16.9 million and $14.2 million, for the six months ended June 30, 2021 and 2020, respectively, at our MH and RV properties. These expenditures improve asset quality in our communities and are incurred when an existing home is removed and the site is prepared for a new home (more often than not, a multi-sectional home). These activities, which are mandated by strict manufacturer's installation requirements and state building codes, include items such as new foundations, driveways and utility upgrades. These expenditures also improve asset quality in our RV resorts and are incurred when site upgrades are performed.

Recurring capital expenditures at our MH and RV properties were $21.7 million and $9.1 million, for the six months ended June 30, 2021 and 2020, respectively. These expenditures relate to our continued commitment to the upkeep of our MH and RV properties.

Recurring capital expenditures at our marinas were $5.9 million for the six months ended June 30, 2021, and include items such as: dredging, dock repairs and improvements, and equipment maintenance and upgrades.

Growth project expenditures were $36.4 million and $8.0 million, for the six months ended June 30, 2021 and 2020, respectively. Growth projects consist of revenue generating or expense reducing activities at MH communities, RV resorts and marinas. This includes, but is not limited to, utility efficiency and renewable energy projects, site, slip or amenity upgrades such as the addition of a garage, shed or boat lift, and other special capital projects that substantiate an incremental rental increase.

We invest in the acquisition of homes intended for the Rental Program and the purchase of vacation rental homes for rental at our RV resorts. Expenditures for these investments depend upon the condition of the markets for repossessions and new home sales, rental homes, and vacation rental homes. We finance certain of our new home and vacation rental home purchases with a $12.0 million manufactured home floor plan facility. Our ability to purchase homes for sale or rent may be limited by cash received from third-party financing of our home sales, available manufactured home floor plan financing and working capital available on our line of credit.

SUN COMMUNITIES, INC.

Cash Flow Activities

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


	Six Months Ended
	June 30, 2021		June 30, 2020
Net Cash Provided by Operating Activities	$	470,708	$	302,027
Net Cash Used for Investing Activities	$	(865,486)	$	(368,116)
Net Cash Provided by Financing Activities	$	421,482	$	420,665
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash	$	267	$	(192)

Cash, cash equivalents, and restricted cash increased by approximately $27.0 million from $92.6 million as of December 31, 2020, to $119.6 million as of June 30, 2021.

Operating Activities - Net cash provided by operating activities increased by $168.7 million from $302.0 million for the six months ended June 30, 2020 to $470.7 million for the six months ended June 30, 2021.

Our net cash flows provided by operating activities from continuing operations may be adversely impacted by, among other things: (a) the market and economic conditions in our current markets generally, and specifically in metropolitan areas of our current markets; (b) lower occupancy and rental rates of our properties; (c) increased operating costs, such as wage and benefit costs, insurance premiums, real estate taxes and utilities, that cannot be passed on to our tenants; (d) decreased sales of manufactured homes; (e) current volatility in economic conditions and the financial markets; and (f) the effects of the COVID-19 pandemic. See "Risk Factors" in Part I, Item 1A of our 2020 Annual Report.

Investing Activities - Net cash used for investing activities was $865.5 million for the six months ended June 30, 2021, compared to $368.1 million for the six months ended June 30, 2020. Refer to Note 3, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated Financial Statements for additional information.

Financing Activities - Net cash provided by financing activities was $421.5 million for the six months ended June 30, 2021, compared to $420.7 million for the six months ended June 30, 2020. Refer to Note 8, "Debt and Line of Credit," and Note 9, "Equity and Temporary Equity," in our accompanying Consolidated Financial Statements for additional information.

Financial Flexibility

In March 2020, the SEC adopted amendments to Rule 3-10 of Regulation S-X and created Rule 13-01 to simplify disclosure requirements related to certain registered securities. The rule became effective January 4, 2021. In April 2021, we filed a new universal shelf registration statement on Form S-3 with the SEC registering, among other securities, debt securities of the Operating Partnership, which will be fully and unconditionally guaranteed by us.

Public Equity Offerings

On March 2, 2021, we priced a $1.1 billion underwritten public offering of an aggregate of 8,050,000 shares at a public offering price of $140.00 per share, before underwriting discounts and commissions. The offering consisted of 4,000,000 shares offered directly by us and 4,050,000 shares offered under a forward equity sales agreement (the "March 2021 Forward Equity Offering"). We sold the 4,000,000 shares on March 9, 2021 and received net proceeds of $537.6 million. In May and June 2021, we completed the physical settlement of the remaining 4,050,000 shares and received net proceeds of $539.7 million after deducting expenses related to the offering. Proceeds from the offering were used to acquire assets and pay down the Safe Harbor Facility.

On September 30, 2020 and October 1, 2020, we entered into two forward sale agreements (the "September 2020 Forward Equity Offerings") relating to an underwritten registered public offering of 9,200,000 shares of our common stock at a public offering price of $139.50 per share. The offering closed on October 5, 2020. On October 26, 2020, we physically settled the September 2020 Forward Equity Offerings (by the delivery of shares of our common stock). Proceeds from the offering were approximately $1.23 billion after deducting expenses related to the offering. We used the net proceeds of this offering to fund the cash portion of the acquisition of the Safe Harbor purchase price, and for working capital and general corporate purposes.

SUN COMMUNITIES, INC.

At the Market Offering Sales Agreements

On June 4, 2021, we entered into the Sales Agreement with certain sales agents, and forward sellers pursuant to which we may sell, from time to time, up to an aggregate gross sales price of $500.0 million of our common stock, through the sales agents, acting as our sales agents or, if applicable, as forward sellers, or directly to the sales agents as principals for their own accounts. The sales agents and forward sellers are entitled to compensation in an agreed amount not to exceed 2.0 percent of the gross price per share for any shares sold under the Sales Agreement. There were no issuances of common stock under the new Sales Agreement during the six months ended June 30, 2021.

Upon entering into the Sales Agreement, we simultaneously terminated our previous At the Market Offering Sales Agreement entered into in July 2017. There were no issuances of common stock under the prior sales agreement during the six months ended June 30, 2021 or during the year ended December 31, 2020. Through June 4, 2021, we sold shares of our common stock for gross proceeds of $163.8 million under the prior sales agreement.

Senior Unsecured Notes

In June 2021, we received investment grade ratings of BBB and Baa3 with a stable outlook from S&P Global and Moody's, respectively. Our credit ratings are based on our operating performance, liquidity and leverage ratios, overall financial position and other factors employed by the credit rating agencies in their rating analysis of us, and, although it is our intent to maintain our investment grade credit ratings, there can be no assurance that we will be able to maintain our current credit ratings. In the event our current credit ratings are downgraded, it may become difficult or more expensive to obtain additional financing or refinance existing indebtedness as maturities become due.

In June 2021, we issued $600.0 million of senior unsecured notes with an interest rate of 2.70 percent and a ten-year term, due 2031 (the "2031 Notes"). The net proceeds from the offering were approximately $592.4 million, after deducting underwriters' discounts and estimated offering expenses. The proceeds were used to pay down borrowings under our line of credit.

The obligations of the Operating Partnership to pay principal, premiums, if any, and interest on the 2031 Notes are guaranteed on a senior basis by Sun Communities, Inc. The guarantee is full and unconditional, and the Operating Partnership is a consolidated subsidiary of the Company. Under Rule 3-10 of Regulation S-X, as amended, subsidiary issuers of obligations guaranteed by the parent are not required to provide separate financial statements, provided that the subsidiary obligor is consolidated into the parent company's consolidated financial statements, the parent guarantee is "full and unconditional" and, subject to certain exceptions, the alternative disclosure required by Rule 13-01 is provided, which includes narrative disclosure and summarized financial information. Accordingly, separate consolidated financial statements of the Operating Partnership have not been presented. Furthermore, as permitted under Rule 13-01(a)(4)(vi), we have excluded the summarized financial information for the Operating Partnership as the assets, liabilities and results of operations of the Operating Partnership are not materially different from the corresponding amounts presented in our consolidated financial statements and management believes such summarized financial information would be repetitive and not provide incremental value to investors.

Line of Credit

On June 14, 2021, we entered into a new credit agreement with certain lenders. The New Credit Agreement combined and replaced our prior $750.0 million A&R Facility and the $1.8 billion Safe Harbor Facility which were scheduled to mature on May 21, 2023 and October 11, 2024, respectively. The Safe Harbor Facility was terminated in connection with the execution of the New Credit Agreement. We repaid all amounts due and outstanding under the Safe Harbor Facility on or prior to such effective date. We recognized a Loss on extinguishment of debt in our Consolidated Statement of Operations related to the termination of the A&R Facility and Safe Harbor facility of $0.2 million and $7.9 million, respectively.

Pursuant to the New Credit Agreement, we may borrow up to $2.0 billion under the New Credit Facility. The New Credit Facility is available to fund all of the Company's business, including its marina business conducted by Safe Harbor. The New Credit Agreement also permits, subject to the satisfaction of certain conditions, additional borrowings (with the consent of the lenders) in an amount not to exceed $1.0 billion with the option to treat all, or a portion, of such additional funds as an incremental term loan.

SUN COMMUNITIES, INC.

Pursuant to the terms of the New Credit Facility, we are subject to various financial and other covenants. The most restrictive financial covenants for the New Credit Facility are as follows:

Covenant

Requirement

As of June 30, 2021

Maximum leverage ratio

<65.0%

24.2%

Minimum fixed charge coverage ratio

>1.40

3.84

Maximum dividend payout ratio

<95.0%

51.9%

Maximum secured leverage ratio

<40.0%

17.4%

In addition, we are required to maintain the following covenant with respect to the senior unsecured notes payable:

Covenant

Requirement

As of June 30, 2021

Total debt to total assets

≤ 60.0%

32.7%

Secured debt to total assets

≤ 40.0%

26.2%

Consolidated income available for debt service to debt service

≥ 1.50

5.90

Unencumbered total asset value to total unsecured debt

≥ 150.0%

934.3%

As of June 30, 2021, we were in compliance with the above covenants and do not anticipate that we will be unable to meet these covenants in the near term.

We anticipate meeting our long-term liquidity requirements, such as scheduled debt maturities, large property acquisitions, expansion and development of properties, other nonrecurring capital improvements and Operating Partnership unit redemptions through the long-term unsecured and secured indebtedness and the issuance of certain debt or equity securities subject to market conditions.

We had unrestricted cash on hand as of June 30, 2021 of approximately $103.5 million. As of June 30, 2021, there was approximately $1.8 billion of remaining capacity on the New Credit Facility. At June 30, 2021 we had a total of 346 unencumbered MH, RV and Marina properties.

SUN COMMUNITIES, INC.

From time to time, we may also issue shares of our capital stock, issue equity units in our Operating Partnership, issue unsecured notes, obtain other debt financing or sell selected assets. Our ability to finance our long-term liquidity requirements in such a manner will be affected by numerous economic factors affecting the MH, RV and marina industries at the time, including the effects of the COVID-19 pandemic, the availability and cost of mortgage debt, our financial condition, the operating history of the properties, the state of the debt and equity markets, and the general national, regional and local economic conditions. When it becomes necessary for us to approach the credit markets, the volatility in those markets could make borrowing more difficult to secure, more expensive, or effectively unavailable. See "Risk Factors" in Part I, Item 1A of our 2020 Annual Report and in Part II, Item 1A of this report. If we are unable to obtain additional debt or equity financing on acceptable terms, our business, results of operations and financial condition would be adversely impacted.

As of June 30, 2021, our net debt to enterprise value was approximately 16.8 percent (assuming conversion of all common OP units, Series A-1 preferred OP units, Series A-3 preferred OP units, Series C preferred OP units, Series D preferred OP units, Series E preferred OP units, Series F preferred OP units, Series G preferred OP units, Series H preferred OP units, Series I preferred OP units, and Series J preferred OP units to shares of common stock). Our debt has a weighted average maturity of approximately 10.4 years and a weighted average interest rate of 3.5 percent.

Off-Balance Sheet Arrangements

Our off-balance sheet investments include nonconsolidated affiliates. These investments all have varying ownership structures. Substantially all of our nonconsolidated affiliates are accounted for under the equity method of accounting as we have the ability to exercise significant influence, but not control, over the operating and financial decisions of these joint venture arrangements. Refer to Note 6, "Investment in Nonconsolidated Affiliates," and Note 8, "Debt and Line of Credit," in the accompanying Consolidated Financial Statements, for additional information on our off-balance sheet investments.

Nonconsolidated Affiliate Indebtedness

GTSC - During September 2019, GTSC entered into a warehouse line of credit with a maximum loan amount of $125.0 million. During September 2020 and May 2021, the maximum amount was increased to $180.0 million and $230.0 million, respectively with an option to increase to $255.0 million subject to the lender's consent. As of June 30, 2021, the aggregate carrying amount of debt, including both our and our partner's share, incurred by GTSC was $201.9 million (of which our proportionate share is $80.8 million). The debt bears interest at a variable rate based on LIBOR plus 1.65 percent per annum and matures on September 15, 2023. Refer to Note 6, "Investment in Nonconsolidated Affiliates," in the accompanying Consolidated Financial Statements for additional information on our nonconsolidated affiliates.

Sungenia JV - During May 2020, Sungenia JV entered into a debt facility agreement with a maximum loan amount of 27.0 million Australian dollars, or $20.3 million converted at the June 30, 2021 exchange rate. As of June 30, 2021, the aggregate carrying amount of debt, including both our and our partners' share, incurred by Sungenia JV was $6.5 million (of which our proportionate share is $3.2 million). The debt bears interest at a variable rate based on Australian BBSY plus 2.05 percent per annum and is available for a minimum of three years. Refer to Note 6, "Investment in Nonconsolidated Affiliates," in the accompanying Consolidated Financial Statements for additional information on our nonconsolidated affiliates.

SUN COMMUNITIES, INC.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains various "forward-looking statements" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and we intend that such forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this filing that relate to expectations, beliefs, projections, future plans and strategies, trends or prospective events or developments and similar expressions concerning matters that are not historical facts are deemed to be forward-looking statements. Words such as "forecasts," "intends," "intend," "intended," "goal," "estimate," "estimates," "expects," "expect," "expected," "project," "projected," "projections," "plans," "predicts," "potential," "seeks," "anticipates," "anticipated," "should," "could," "may," "will," "designed to," "foreseeable future," "believe," "believes," "scheduled," "guidance," "target" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements reflect our current views with respect to future events and financial performance, but involve known and unknown risks and uncertainties, both general and specific to the matters discussed in this filing. These risks and uncertainties may cause our actual results to be materially different from any future results expressed or implied by such forward-looking statements. In addition to the risks disclosed under "Risk Factors" in our 2020 Annual Report, and in our other filings with the SEC, such risks and uncertainties include, but are not limited to:

•outbreaks of disease, including the COVID-19 pandemic, and related stay-at-home orders, quarantine policies and restrictions on travel, trade and business operations;

•changes in general economic conditions, the real estate industry and the markets in which we operate;

•difficulties in our ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully;

•our liquidity and refinancing demands;

•our ability to obtain or refinance maturing debt;

•our ability to maintain compliance with covenants contained in our debt facilities and our senior unsecured notes;

•availability of capital;

•changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian and Australian dollars;

•our ability to maintain rental rates and occupancy levels;

•our ability to maintain effective internal control over financial reporting and disclosure controls and procedures;

•increases in interest rates and operating costs, including insurance premiums and real property taxes;

•risks related to natural disasters such as hurricanes, earthquakes, floods and wildfires;

•general volatility of the capital markets and the market price of shares of our capital stock;

•our ability to maintain our status as a REIT;

•changes in real estate and zoning laws and regulations;

•legislative or regulatory changes, including changes to laws governing the taxation of REITs;

•litigation, judgments or settlements;

•competitive market forces;

•the ability of purchasers of manufactured homes and boats to obtain financing; and

•the level of repossessions by manufactured home lenders.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We undertake no obligation to publicly update or revise any forward-looking statements included or incorporated by reference into this filing, whether as a result of new information, future events, changes in our expectations or otherwise, except as required by law.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. All written and oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by these cautionary statements.

SUN COMMUNITIES, INC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the exposure to loss resulting from changes in market factors such as interest rates, foreign currency exchange rates, commodity prices and equity prices.

Interest Rate Risk

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

Our variable rate debt totaled $231.5 million and $115.4 million as of June 30, 2021 and 2020, respectively, and bears interest at Adjusted Eurocurrency Rate or BBSY rate, plus a margin, and Prime or various LIBOR rates, respectively. If Adjusted Eurocurrency Rate or BBSY rate, and Prime or LIBOR rates increased or decreased by 1.0 percent, our interest expense would have increased or decreased by approximately $5.8 million and $1.5 million for the six months ended June 30, 2021 and 2020, respectively, based on the $1.2 billion and $306.3 million average balances outstanding under our variable rate debt facilities, respectively.

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate risk is the risk that fluctuations in currencies against the U.S. dollar will negatively impact our results of operations. We are exposed to foreign currency exchange rate risk as a result of remeasurement and translation of the assets and liabilities of our Canadian properties, and our Australian equity investment and joint venture into U.S. dollars. Fluctuations in foreign currency exchange rates can therefore create volatility in our results of operations and may adversely affect our financial condition.

At June 30, 2021 and December 31, 2020, our stockholder's equity included $282.1 million and $250.8 million from our Canadian subsidiaries and Australian equity investments, respectively, which represented 4.2 percent and 4.5 percent of total stockholder's equity, respectively. Based on our sensitivity analysis, a 10.0 percent strengthening of the U.S. dollar against the Canadian and Australian dollar would have caused a reduction of $28.2 million and $25.1 million to our total stockholder's equity at June 30, 2021 and December 31, 2020.

Capital Market Risk

We are exposed to risks related to the equity capital markets, and our related ability to raise capital through the issuance of our common stock or other equity instruments. We are also exposed to risks related to the debt capital markets, and our related ability to finance our business through borrowings under other financing arrangements. As a REIT, we are required to distribute a significant portion of our taxable income annually, which constrains our ability to accumulate operating cash flow and therefore requires us to utilize debt or equity capital to finance our business. We seek to mitigate these risks by monitoring the debt and equity capital markets to inform our decisions on the amount, timing, and terms of capital we raise.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (pursuant to Rules 13a-15(e) or 15d-15(e) of the Exchange Act) at June 30, 2021. Based upon this evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2021.

In October 2020, we completed the acquisition of Safe Harbor and are currently integrating Safe Harbor into our operations, compliance program and internal control processes. Safe Harbor constituted approximately 23 percent of our total assets as of December 31, 2020, including the goodwill and other intangible assets recorded as part of the purchase price allocation, and three percent of our revenues for the year ended December 31, 2020. SEC regulations allow companies to exclude acquisitions from their assessment of internal control over financial reporting during the first year following an acquisition. We have excluded the acquired operation of Safe Harbor from our assessment of our internal control over financial reporting for the six months ended June 30, 2021. As of June 30, 2021, Safe Harbor represented approximately 26 percent of our total assets and 24 percent of our revenues for the quarter ending June 30, 2021.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting during the three months ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

SUN COMMUNITIES, INC.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to "Legal Proceedings" in Part 1 - Item 1 - Note 15, "Commitments and Contingencies," in our accompanying Consolidated Financial Statements.

ITEM 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the risk factors described in Part 1, Item 1A., "Risk Factors," in our 2020 Annual Report, which could materially affect our business, financial condition or future results. There have been no material changes to the disclosure on these matters as set forth in such report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Holders of our OP units have converted the following units during the three months ended June 30, 2021:


		Three Months Ended
		June 30, 2021
Series	Conversion Rate	Units / Shares Converted	Common Stock(1)
Common OP units	1.0000	12,950	12,950
Series A-1 preferred OP units	2.4390	2,294	5,594

(1)Calculation may yield minor differences due to rounding incorporated in the above numbers.

All of the above shares of common stock were issued in private placements in reliance on Section 4(a)(2) of the Securities Act, including Regulation D promulgated thereunder, based on certain investment representations made by the parties to whom the securities were issued. No underwriters were used in connection with any of such issuances.

ITEM 6. EXHIBITS


Exhibit No.	Description	Method of Filing
3.1	Sun Communities, Inc. Articles of Restatement	Incorporated by reference to Sun Communities, Inc.'s Annual Report on Form 10-K filed on February 22, 2018
3.2	Third Amended and Restated Bylaws	Incorporated by reference to Sun Communities Inc.'s Current Report on Form 8-K filed on May 12, 2017
4.1	Indenture, dated as of June 28, 2021 by and between Sun Communities Operating Limited Partnership and UMB Bank, N.A. as trustee.	Incorporated by reference to Sun Communities Inc.'s Current Report on Form 8-K filed on June 28, 2021
4.2	First Supplemental Indenture, dated as of June 28, 2021 by and among Sun Communities Operating Limited Partnership, Sun Communities, Inc., and UMB Bank, N.A. as trustee.	Incorporated by reference to Sun Communities Inc.'s Current Report on Form 8-K filed on June 28, 2021
4.3	Form of Global Note for 2.700% Notes due 2031	Incorporated by reference to Sun Communities Inc.'s Current Report on Form 8-K filed on June 28, 2021
10.1*	Ninth Amendment to Agreement of Limited Partnership of Sun Communities Operating Limited Partnership, dated April 21, 2021	Incorporated by reference to Sun Communities Inc.'s Current Report on Form 8-K filed on April 23, 2021
10.2*	Fourth Amended and Restated Credit Agreement, dated June 14, 2021, among Sun Communities Operating Limited Partnership, as Borrower, Citibank, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Citibank, N.A., Citizens Bank, N.A., BofA Securities, Inc., BMO Capital Markets Corp., JPMorgan Chase Bank, N.A., Fifth Third Bank, Regions Bank, Royal Bank of Canada, The Huntington National Bank, Truist Bank, U.S. Bank National Association, and Wells Fargo Bank, National Association, as Joint Lead Arrangers, and Citibank, N.A., Citizens Bank, N.A., BofA Securities, Inc., BMO Capital Markets Corp., and JPMorgan Chase Bank, N.A., as Joint Bookrunners, and Bank of America, N.A., JPMorgan Chase Bank, N.A., Bank of Montreal, and Citizens Bank, N.A., as Co-Syndication Agents	Incorporated by reference to Sun Communities Inc.'s Current Report on Form 8-K filed on June 14, 2021
22.1	List of issuers of guaranteed securities	Filed herewith
31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith
31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	Filed herewith
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed herewith
* Certain schedules and exhibits have been omitted pursuance to Item 601(a)(5) of Regulation S-K because such schedules and exhibits do not contain information which is material to an investment decision or which is not otherwise disclosed in the filed agreements. The Company will furnish the omitted schedules and exhibits to the SEC upon request by the SEC.


ITEM 6. EXHIBITS (continued)

Exhibit No.	Description	Method of Filing
101.INS	XBRL Instance Document	The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH	XBRL Taxonomy Extension Schema Document	Filed herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed herewith
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith
104	Cover Page Interactive Data File (embedded within the Inline XBRL document contained in Exhibit 101)	Filed herewith

SUN COMMUNITIES, INC.

SIGNATURES

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



Dated: July 27, 2021	By:	/s/ Karen J. Dearing
		Karen J. Dearing, Chief Financial Officer and Secretary (Duly authorized officer and principal financial officer)