Real Estate Acquisitions

2017 Acquisitions

In September 2017, we acquired three age-restricted manufactured home (“MH”) communities: Lazy J Ranch, with 220 sites in Arcata, California; Ocean West, with 130 sites in McKinleyville, California; and Caliente Sands, with 118 sites in Cathedral City, California.

In July 2017, we acquired Pismo Dunes RV Resort (“Pismo Dunes”), an age-restricted recreational vehicle (“RV”) community with 331 sites located in Pismo Beach, California.

In June 2017, we acquired Arbor Woods (“Arbor Woods”), a MH community with 458 sites located in Superior Township, Michigan.

In May 2017, we acquired Sunset Lakes RV Resort (“Sunset Lakes”), a RV resort with 498 sites located in Hillsdale, Illinois.

In March 2017, we acquired Far Horizons 49er Village RV Resort Inc. (“49er Village”), a RV resort with 328 sites located in Plymouth, California.

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 2017 (in thousands):



At Acquisition Date	Lazy J Ranch ⁽¹⁾		Ocean West ⁽¹⁾		Caliente Sands ⁽¹⁾		Pismo Dunes ⁽¹⁾			Arbor Woods ⁽¹⁾		Sunset Lakes ⁽¹⁾		49er Village ⁽¹⁾		Total
Investment in property	$	14,300	$	9,673	$	8,850	$	21,260		$	15,725	$	7,835	$	12,890	$	90,533
Notes receivable	—		—		—		—			23		—		—		23
Inventory of manufactured homes	—		—		21		—			465		—		—		486
In-place leases	—		—		—		660			730		210		110		1,710
Total identifiable assets acquired net of liabilities assumed	$	14,300	$	9,673	$	8,871	$	21,920		$	16,943	$	8,045	$	13,000	$	92,752


Consideration
Cash	$	14,300	$	5,081	$	8,871	$	—		$	14,943	$	8,045	$	13,000	64,240
Equity	—		—		—		26,410			2,000		—		—		28,410
Liabilities assumed	—		4,592		—		510			—		—		—		5,102
Receivable due from seller	—		—		—		(5,000		)	—		—		—		(5,000		)
Total consideration	$	14,300	$	9,673	$	8,871	$	21,920		$	16,943	$	8,045	$	13,000	$	92,752

⁽¹⁾ The purchase price allocations for Lazy J Ranch, Ocean West, Caliente Sands, Pismo Dunes, Arbor Woods, Sunset Lakes, and 49er Village are preliminary and may be adjusted as final costs and valuations are determined.

The amount of total revenues and net income included in the Consolidated Statements of Operations for the three and nine months ended September 30, 2017 related to the acquisitions completed in 2017 are set forth in the following table (in thousands):



	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
	(unaudited)		(unaudited)
Total revenues	$	3,178	$	4,493
Net income	$	935	$	1,418

The following unaudited pro forma financial information presents the results of our operations for the three and nine months ended September 30, 2017 and 2016, as if the properties acquired in 2017 had been acquired on January 1, 2016. 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 acquisitions been consummated on January 1, 2016 (in thousands, except per-share data):



	Three Months Ended September 30,				Nine Months Ended September 30,
	(unaudited)				(unaudited)
	2017		2016		2017		2016
Total revenues	$	272,214	$	255,580	$	746,299	$	623,840
Net income attributable to Sun Communities, Inc. common stockholders	$	25,337	$	20,660	$	59,176	$	21,246
Net income per share attributable to Sun Communities, Inc. common stockholders - basic	$	0.32	$	0.30	$	0.79	$	0.33
Net income per share attributable to Sun Communities, Inc. common stockholders - diluted	$	0.32	$	0.30	$	0.78	$	0.33

Additionally, during the three months ended June 30, 2017, we acquired Carolina Pines RV Resort, an undeveloped parcel of land (“Carolina Pines” formerly known as Bear Lake), near Myrtle Beach, South Carolina, for $5.9 million. This land parcel has been entitled and zoned to build a 775 site RV resort.

Transaction costs of $2.2 million and $4.2 million have been incurred for the three months ended September 30, 2017 and 2016, respectively. For the nine months ended September 30, 2017 and 2016, transactions costs were $7.0 million and $27.9 million, respectively. These costs are presented as “Transaction costs” in our Consolidated Statements of Operations.

2016 Acquisitions

In June 2016, we acquired all of the issued and outstanding shares of common stock of Carefree Communities Inc. (“Carefree”) through the Operating Partnership for an aggregate purchase price of $1.68 billion. Carefree owned 103 MH and RV communities, comprising over 27,000 sites.

At the closing, we issued 3,329,880 shares of common stock at $67.57 per share (or $225.0 million in common stock) to the seller and the Operating Partnership paid the balance of the purchase price in cash. Approximately $1.0 billion of the cash payment was applied simultaneously to repay debt on the properties owned by Carefree. The Operating Partnership funded the cash portion of the purchase price in part with proceeds from debt financings as described in Note 7, “Debt and Lines of Credit” and net proceeds of $385.4 million from an underwritten public offering of 6,037,500 shares of common stock at a price of $66.50 per share in March 2016.

We have allocated the “investment in property” balances for Carefree to the respective balance sheet line items upon completion of a purchase price allocation in accordance with the FASB ASC Topic 805 - Business Combinations, as set forth in the table below (in thousands):



At Acquisition Date	Carefree
Investment in property	$	1,670,981
Ground leases	33,270
In-place leases	35,010
Deferred tax liability	(23,637		)
Other liabilities	(15,665		)
Inventory of manufactured homes	13,521
Below market lease	(29,340		)
Total identifiable assets acquired and liabilities assumed	$	1,684,140

Consideration
Cash and equity	$	1,684,140

Additionally, during 2016, we acquired seven RV resorts and one MH community for total consideration of $89.7 million. We added 1,677 sites in six states as a result of these acquisitions.

The amount of revenue and net income included in the Consolidated Statements of Operations for the three and nine months ended September 30, 2017 related to the Carefree acquisition and other acquisitions completed during 2016 is set forth in the following table (in thousands):



	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
	(unaudited)		(unaudited)
Revenue	$	55,034	$	156,021
Net income	$	3,987	$	17,013