Sun Communities, Inc. · NYSE:SUI

Sun Communities — REITWorld 2016: NAREIT's Annual Convention

25 slides from Sun Communities's conference presentation, Nov 14, 2016

  1. Slide 1: REITWorld 2016: NAREIT's Annual Convention

    REITWorld 2016: NAREIT's Annual Convention Phoenix, AZ | November 15-17, 2016 Gary Shiffman Chief Executive Officer Karen Dearing Chief Financial Officer John McLaren Chief Operating Officer Fernando Castro-Caratini SVP, Finance & Capital Markets

  2. Slide 2: Forward-Looking Statements

    FORWARD-LOOKING STATEMENTS This presentation has been prepared for informational purposes only from information supplied by Sun Communities, Inc. (the "Company") and from third-party sources indicated herein. Such third-party information has not been independently verified. The Company makes no repr

  3. Slide 3: Current Portfolio as of September 30, 2016

    227 manufactured housing only communities 27 manufactured housing and recreational vehicle communities 85 recreational vehicle only communities 339 communities consisting of approximately 117,000 sites across 29 states and Ontario 79,945 manufactured housing sites 37,307 recreational vehicle sites 2

  4. Slide 4: Q3 2016 Highlights

     895 total homes sold, an increase of 43.0%, as compared to the third quarter of 2015  Revenue producing sites increased by 292 sites for the quarter bringing total portfolio occupancy to 96.2%1, up ~250 basis points from the third quarter of 2015  Same-community Net Operating Income grew to $86.

  5. Slide 5: Building Blocks Position Sun for Sustainable Growth

    BUILDING BLOCKS POSITION SUN FOR SUSTAINABLE GROWTH Rent & Occupancy Expansions Acquisitions < < Os Premier owner and operator of manufactured home (MH) and recreational vehicle (RV) communities Strong a pine tested nea z operating, expanding and acquiring MH and RV communities dating back to 1 Prov

  6. Slide 6: Sun's Favorable Revenue Drivers

    Royal Palm Village Haines City, FL 6 Resident Resales Home Move-out 1 Source: Company Information. 5 year average. 4.9% 5.1% 4.7% 4.9% 4.6% 5.0% 5.9% 6.5% 2.8% 2.3% 2.3% 2.5% 2.6% 2.6% 2.0% 1.9% 2009 2010 2011 2012 2013 2014 2015 Q3 2016 Sun’s Resident Move-out Trends SUN’S FAVORABLE REVENUE DRIVERS

  7. Slide 7: Stable income and occupancy; same-community NOI growth

     Low-annual resident turnover results in stability of income and occupancy  Strong and consistent rental growth creates a stable revenue stream that is recession-resistant  Positive NOI growth for 16 consecutive years  Occupancy gains are a function of Sun’s integrated platform, which includes:

  8. Slide 8: Expansions Provide Strong Growth and Attractive Returns

     Inventory of approximately 10,500 zoned and entitled sites available for expansion at 66 communities in 18 states and Ontario  Approximately 750 sites are expected to be developed by the end of 2016  A 100 site expansion at a $25,000 cost per site, that is leased up in a year (8 sites/month), re

  9. Slide 9: Expansion Opportunities Supported by Rental Program

    Rental Program All-in 5 Year Unleveraged IRR:  $42,000 Initial investment in new home  Weighted average monthly rental rate $865 x 12 = $10,380 (3% annual increases)  Monthly operating expenses1 $250 x 12 = $3,000 (2% annual increases)  End of 5 year period sell the home and recoup > 95% of orig

  10. Slide 10: Extracting Value from Acquisitions

    STRATEGIC ACQUISITIONS PROFESSIONAL OPERATIONAL MANAGEMENT CALL CENTER / DIGITAL MARKETING OUTREACH INCREASING MARKET RENT ADDING VALUE WITH EXPANSIONS REPOSITIONING WITH ADDITIONAL CAPEX SKILLED EXPENSE MANAGEMENT EXTRACTING VALUE FROM ACQUISITIONS HOME SALES / RENTAL PROGRAM 9

  11. Slide 11: Portfolio growth 2011-2016

    2011 2012 2013 2014 2015 2016 136 communities 54,811 sites • 17 MH and 1 RV community Kentland acquisition growing the portfolio 173 communities 63,697 sites • Further strengthened the MH portfolio with the 6 community Rudgate acquisition • Acquired Palm Creek, an irreplaceable age-restricted asset

  12. Slide 12: Key Market Penetration from Carefree Acquisition

    ONTARIO, CANADA 4,888 189 757 15,909 5,032 92 398 307  With the Carefree acquisition Sun has deepened its presence in key high-barrier markets Carefree Property Additions Sun Communities Properties POST-TRANSACTION FL 43,438 37.0% TX 7,534 6.4% CA 5,275 4.5% ON 4,938 4.2% AZ 4,614 3.9% NJ 3,009 2.6

  13. Slide 13: Acquisition Profitability

    ACQUISITION PROFITABILITY 13 Source: Company Information. Refer to Sun Communities, Inc. Form 10-K and Supplemental for the respective periods ended set forth above for additional information. Refer to information regarding non-GAAP financial measures starting on page 20 of the attached Appendix. 1

  14. Slide 14: Strategic Balance Sheet

    STRATEGIC BALANCE SHEET Y Balance sheet supports growth strategy ¥ Reduced leverage through recent equity offerings ¥ Anticipates further delevering over time through full- year EBITDA contribution from Carefree and earnings growth As of September 30, 2016 Net Debt / Adj. EBITDA" Net Debt / TEV? 9m

  15. Slide 15: Mortgage Debt Maturity Profile

     Sun’s annual mortgage maturities average 4.2% over the next 4 years WEIGHTED AVERAGE INTEREST RATE CMBS $531,366 5.23% Fannie Mae $1,095,397 4.36% Freddie Mac $334,059 3.95% Life Companies $894,009 3.80% Total $2,854,831 4.30% PRINCIPAL OUTSTANDING 1 $11.4 $140.6 $102.5 $118.3 YE 2016 YE 2017 YE 2

  16. Slide 16: Strong Internal Growth

    Source: Citi Investment research, July, 2016. “REITs”- includes an index of REITs across a variety of asset classes including self storage, mixed office, regional malls, shopping centers, multifamily, student housing, manufactured homes and specialty. Refer to information regarding non-GAAP financia

  17. Slide 17: Strategy-Driven Outperformance

    5-Year Total Return Percentage Source: SNL Financial as of September 30, 2016. 10-Year Total Return Percentage +191% +108% +113% +467% +101% +83%  Sun has significantly outperformed major REIT and broader market indices over the last ten years STRATEGY-DRIVEN OUTPERFORMANCE -50 0 50 100 150 200 250

  18. Slide 18: Appendix

    APPENDIX Lakeside Crossing Conway, SC Gwynn’s Island RV Resort Gwynn Island, VA Palm Creek Golf & RV Resort Casa Grande, AZ Ocean Breeze Resort Jensen Beach, FL

  19. Slide 19: Consistent NOI Growth

    CONSISTENT NOI GROWTH  Manufactured housing is one of the most recession-resistant sectors of the housing and commercial real estate sectors and has consistently outperformed multi-family in same-site NOI growth since 20001 Source: SNL Financial as of September 30, 2016. Refer to information regard

  20. Slide 20: Manufactured Housing vs. Multi-Family

    Sun’s Manufactured Homes VS.  Sun’s manufactured homes provide nearly 15% more space at over 30% less cost per square foot RENT    ~$860 1 per month Multi-Family Housing ~$1,1002 per month SQUARE FOOTAGE PRICE ~1,2501 sq. ft. ~1,1002 sq. ft. $0.69 per sq. ft. $1.00 per sq. ft. 1 Source: Company

  21. Slide 21: Manufactured homes vs. single-family home costs

    1 Source: Manufactured Housing Institute, Quick Facts: “Trends and Information About the Manufactured Housing Industry, 2016.” Represents average 2 bedroom household in major metropolitan areas Sun operates in as of September 2016. 2 Source: US Census Bureau - 2010-2014 American Community Survey 5-Y

  22. Slide 22: Non-GAAP financial measures definitions

    Funds from operations (FFO) represents net income (loss) (computed in accordance with GAAP) and gain (loss) on sales of depreciable property, plus real estate related depreciation and amortization (excluding amortization of financing costs), and after adjustments for unconsolidated partnerships and

  23. Slide 23: Reconciliation of Net Income to Funds from Operations

    Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to Funds from Operations (amounts in thousands except for per share data) 2016 2015 2016 2015 2015 2014 2013 Net income attributable to Sun Communities, Inc. common stockholders 18,897$ 28,763$ 18,969$ 47,926$ 137

  24. Slide 24: Reconciliation of Net Operating Income to Net Income

    Reconciliation of Net Operating Income to Net Income Attributable to Sun Communities, Inc. Common Stockholders (amounts in thousands) 2016 2015 2016 2015 2015 2014 2013 Real Property NOI 114,851$ 90,312$ 296,081$ 254,438$ 335,567$ 232,478$ 203,176$ Rental Program NOI 21,213 20,587 64,223 62,805 83,2

  25. Slide 25: Reconciliation of Recurring EBITDA to Net Income

    Reconciliation of Recurring EBITDA to Net Income Attributable to Sun Communities, Inc. Common Stockholders (amounts in thousands) 2016 2015 2016 2015 2015 2014 2013 Recurring EBITDA 123,276$ 96,186$ 308,378$ 264,293$ 347,873$ 222,853$ 207,037$ Interest 33,800 27,453 88,522 79,593 107,659 73,771 73,3

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