SUN COMMUNITIES INC (SUI) FY 2021 MD&A

ITEM 7.     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 accompanying footnotes thereto included in this Annual Report on Form 10-K. In addition to the results presented in accordance with GAAP below, we have provided NOI and FFO as supplemental performance measures. Refer to Non-GAAP Financial Measures in this Item 7 for additional information.

OVERVIEW

We are a fully integrated REIT. As of December 31, 2021, we owned and operated, directly or indirectly, or had an interest in, a portfolio of 602 developed properties located in 39 states throughout the United States, Ontario, Canada and Puerto Rico, including 284 MH communities, 160 RV resorts, 33 properties containing both MH and RV sites, and 125 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

The impact of COVID-19 in 2021 was minimal compared to 2020.

In response to the COVID-19 pandemic, 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 follow the numerous health and safety measures we previously implemented 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, provide status updates to our operations and main office leadership teams, and adjust our operating processes accordingly. 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.

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.

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EXECUTIVE SUMMARY

2021 General Overview

•Total revenues for 2021 increased 62.5 percent to $2.3 billion.

•Core FFO for 2021 was $6.51 per diluted share and OP unit, an increase of 27.9 percent over 2020.

•Achieved MH and RV real property Same Community NOI growth of 11.2 percent over 2020.

•Attained MH and RV Same Community occupancy of 98.9 percent.

•Home sales volume increased 42.6 percent to 4,088 homes in 2021 as compared to 2,866 in 2020.

•Brokered homes sales increased by 38.0 percent to 3,528 in 2021 as compared to 2,557 in 2020.

•Achieved 1-year, 3-year and 5-year total shareholder return of 40.8 percent, 120.1 percent and 210.3 percent, respectively, outperforming or in-line with the MSCI US REIT, Russell 1000, U.S. REIT Residential and S&P 500 indexes.

•We acquired 54 properties, totaling over 16,800 sites, wet slips and dry storage spaces, and sites for expansion for a total purchase price of $1.4 billion.

•Completed the construction of over 1,030 total sites at eight ground-up developments and re-development properties.

•Delivered nearly 580 total expansion sites in 11 MH and RV properties.

•Successfully integrated Safe Harbor, which contributed 16.5 percent of the real property NOI - Total Portfolio in 2021.

•Received investment grade ratings of BBB and Baa3 with a stable outlook from S&P Global and Moody's, respectively, which provides us with an additional source of financing.

•Closed two underwritten senior unsecured note offerings for aggregate net proceeds of approximately $1.2 billion.

•Closed an underwritten registered public offering, in which we sold 4,000,000 shares of our common stock and completed a forward sale agreement for an additional 4,050,000 shares of our common stock, for net proceeds of approximately $1.1 billion.

•Completed two forward sale agreements relating to an underwritten registered public offering of 4,025,000 shares of our common stock at a public offering price of $185.00 per share.

•Entered into a definitive agreement to acquire Park Holidays, the second largest owner and operator of holiday communities in the United Kingdom for approximately £950.0 million, or $1.3 billion.

Property Operations

Occupancy in our MH and annual RV properties, as well as our ability to increase rental rates, directly affect revenues. Our revenue streams are predominantly derived from customers renting our sites on a long-term basis. Our Same Community properties continue to achieve revenue and occupancy increases which drive continued NOI growth. Our home sales in our communities remained strong in 2021 and we expect this trend to continue.

(1) Occupancy percent includes annual RV sites and excludes transient RV sites.

(2) Occupancy percent excludes recently completed but vacant expansion sites.

(3) Same Community is based on the as reported year end Same Community count for each respective year.

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Acquisition Activity

During the past three years, we have completed acquisitions of over 225 properties with over 28,500 sites and over 45,000 wet slips and dry storage spaces located in high growth areas and retirement and vacation destinations such as California, Florida, Texas, Arizona and coastal areas in the Eastern United States.

During 2021, we acquired 35(1) MH communities and RV resorts, and 19(1) marinas, as detailed below:

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(1) Refer to Note 3, "Real Estate Acquisitions and Dispositions," for additional detail on the acquisition of MH, RV and marina properties.

(2) Contains 407 development sites.

(3) Contains 340 development sites.

(4) Contains 150 development sites.

(5) Contains 165 development sites.

Disposition Activity

On July 2, 2021, we sold two MH communities located in Indiana and Missouri, containing a combined 677 sites, for $67.5 million. The gain from the sale of the property was approximately $49.4 million.

On August 26, 2021, we sold four MH communities located in Arizona, Illinois and Missouri, containing a combined 1,137 sites, for $94.6 million. The gain from the sale of the property was approximately $58.7 million.

Construction Activity

Ground-up Developments - During the year ended December 31, 2021, we constructed over 1,000 total sites at seven ground-up development properties and one re-development located in California, Colorado, Texas, Florida, North Carolina and South Carolina.

Expansions - We have been focused on expansion opportunities adjacent to our existing properties, and we have developed over 2,100 sites within the past three years. We have expanded nearly 580 total sites at 11 MH and RV properties in 2021.

We continue to expand our properties utilizing our inventory of owned and entitled land. We have 10,672 MH and RV sites suitable for future development.

Markets

Our MH and RV properties are largely concentrated in Florida, Michigan, Texas and California, which contain 62.6 percent of our total MH and RV sites. We have expanded our market share in multiple states through recent acquisitions and increased our property holdings in high growth areas of the U.S. including retirement and vacation destinations.

We have also experienced strong revenue growth through recent acquisitions of RV resorts. The age demographic of RV resorts is attractive, as the population of retirement age adults in the U.S. is growing. RV resorts have become a trending vacation opportunity not only for the retiree population, but as an affordable vacation alternative for families and millennials.

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The following table identifies our MH and RV markets by total sites:

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Our marinas are largely concentrated in Florida, Connecticut, Rhode Island, Massachusetts, New York, Maryland and California.

The following table identifies our marina markets by total wet slips and dry storage spaces:

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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.

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RESULTS OF OPERATIONS

Summary Statements 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 years ended December 31, 2021, 2020 and 2019 (in thousands):

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Seasonality of Revenue

The RV and marina industries are seasonal in nature, and the results of operations in any one period may not be indicative of results in future periods.

In the RV segment, certain properties maintain higher occupancy during the summer months, while other properties maintain higher occupancy during the winter months. Based on the location of our properties with transient RV sites, our portfolio generally produces higher revenues between April and September than between October and March. Real property - transient revenue is included in RV segment revenue. The following table presents the seasonality of real property-transient revenue for the years ended December 31, 2021, 2020 and 2019:

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 stores. 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. Seasonal real property revenue was approximately $246.6 million and $24.4 million for the years ended December 31, 2021 and 2020, respectively. In 2021, seasonal real property revenue was recognized 17.7 percent in the first quarter, 25.0 percent in the second quarter, 29.9 percent in the third quarter and 27.4 percent in the fourth quarter. In 2020, seasonal real property revenue was recognized 100 percent in the fourth quarter, given that the Safe Harbor acquisition closed during the fourth quarter.

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Comparison of the Years Ended December 31, 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 years ended December 31, 2021 and 2020 (in thousands, except for statistical information):

(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 year ended December 31, 2020 have been translated at 2021 average exchange rates, respectively.

The $260.8 million increase in Real property NOI from 2020 to 2021 consists of $76.8 million from Same Community as detailed below, $148.0 million from the marinas and $36.0 million from recently acquired properties in the year ended December 31, 2021 as compared to 2020.

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Real Property Operations - Same Community Portfolio

A key management tool used when evaluating performance and growth of our properties is a comparison of the Same Community portfolio. Same Community refers to properties that we have owned for at least the preceding year, 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 Community portfolio, 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. For the years ended December 31, 2021 and 2020, Canadian currency figures included within the year ended December 31, 2020 have been translated at 2021 average exchange rates. For the years ended December 31, 2020 and 2019, Canadian currency figures included within the year ended December 31, 2019 have been translated at 2020 average exchange rates.

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(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 and 2019 have been adjusted to reflect incremental growth period-over-period from filled 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 the year ended December 31, 2020 and 2019 have been translated at 2021 and 2020 average exchange rates, respectively.

Years ended December 31, 2021 and 2020

The Same Community data includes all properties that we have owned and operated continuously since January 1, 2020, exclusive of ground-up development and redevelopment properties recently completed or under construction, and other properties as determined by management. We have reclassified $69.0 million and $63.1 million of utilities rebilled for the years ended December 31, 2021 and 2020, respectively, from Income from real property to Property operating expense to reflect the utility expenses associated with our Same Community portfolio net of resident retail.

The $76.8 million, or 11.2 percent, increase in Total Same Community NOI is due to a $52.0 million, or 28.9 percent, increase in NOI from the RV segment and $24.8 million, or 4.9 percent, increase in NOI from the MH segment.

The RV segment's $52.0 million, or 28.9 percent, increase in NOI is primarily due to an increase in Real property - transient revenue of $50.9 million, or 35.8 percent, due to increased transient and vacation rental stays at our resorts. 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's $24.8 million, or 4.9 percent, increase in NOI is primarily due to an increase in Real property (excluding transient) revenue of $29.8 million, or 4.5 percent. Real property (excluding transient) revenue increased due to a 3.4 percent increase in monthly base rent per MH site and a 1.4 percent increase in occupancy when compared to the same period in 2020.

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Years ended December 31, 2020 and 2019

The Same Community data includes all properties which we have owned and operated continuously since January 1, 2019, exclusive of ground-up development and redevelopment properties recently completed or under construction, and other properties as determined by management. We have reclassified $37.7 million and $34.7 million of utilities rebilled for the years ended December 31, 2020 and 2019, respectively, from Income from real property to Property operating expense to reflect the utility expenses associated with our Same Community portfolio net of recovery.

The $27.8 million, or 4.4 percent, growth in Total Same Community NOI is due to a 1.8 percent increase in occupancy and $28.1 million, or 6.1 percent, increase in NOI from the MH segment.

The RV segment NOI remained flat when compared to the same period in 2019.

The MH segment $28.1 million, or 6.1 percent, growth in NOI is primarily due to an increase in Real property (excluding transient) revenue of $34.4 million, or 5.8 percent. Real property (excluding transient) revenue increased due to a 3.4 percent increase in monthly base rent per MH site and a 1.8 percent increase in occupancy when compared to the same period in 2019.

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Marina Summary

The following table reflects certain financial and other information for our marinas for the year ended December 31, 2021 (in thousands, except for statistical information):

N/M = Percentage change is not meaningful.

(a) Contains two months of activity.

(b) Marina results net $15.0 million for the year ended December 31, 2021 and $4.5 million for the two months ended December 31, 2020 of certain utility revenue against the related utility expense in property operating and maintenance expense.

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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 lease or sell to current and prospective residents.

The following table reflects certain financial and statistical information for our Home Sales Program for the years ended December 31, 2021 and 2020 (in thousands, except for average selling prices and statistical information):

Gross Profit - New Homes

For the year ended December 31, 2021, the $6.6 million, or 46.2 percent, increase in gross profit is primarily the result of a 28.4 percent increase in new home sales volume, coupled with a 12.2 percent increase in new home average selling price, as compared to the same period in 2020.

Gross Profit - Pre-owned Homes

For the year ended December 31, 2021, the $42.7 million, or 144.0 percent, increase in gross profit is primarily the result of a 46.2 percent increase in pre-owned home sales volume, coupled with a 12.8 percent increase in gross margin, primarily due to a 17.8 percent increase in the pre-owned home average selling price, as compared to the same period in 2020.

Homes sales NOI

For the year ended December 31, 2021, the $45.8 million, or 159.9 percent, increase in NOI is primarily the result of a 42.6 percent increase in home sales volume, coupled with an increase in new home and pre-owned home average selling price and pre-owned home margin, as compared to the same period in 2020.

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Rental Program Summary

The following table reflects certain financial and other information for our Rental Program for the years ended December 31, 2021 and 2020 (in thousands, except for statistical information):

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 our operations.

For the year ended December 31, 2021, Rental Program NOI increased $1.4 million, or 1.2 percent as compared to the same period in 2020. The increase is primarily due to a 6.5 percent increase in weighted average monthly rent, coupled with a 3.3 percent decrease in expenses, partially offset by a decrease in the number of occupied rental homes as compared to the same period in 2020.

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Other Items - Statements of Operations(1)

The following table summarizes other income and expenses for the years ended December 31, 2021 and 2020 (amounts in thousands):

(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 year ended December 31, 2021, increased primarily due to the addition of marina service revenue, driven by a full year of activity from Safe Harbor, and increases in RV resort activity revenues as compared to 2020.

Brokerage commissions and other, net - for the year ended December 31, 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 expense - for the year ended December 31, 2021, increased primarily due to a full year of activity from Safe Harbor, and an increase in wages and incentives driven by growth in strategic initiatives and acquisition activity, as compared to 2020.

Business combination expense, net - for the year ended December 31, 2021, decreased due to the prior year acquisition of Safe Harbor. Refer to Note 3, "Real Estate Acquisitions and Dispositions," of our accompanying Consolidated Financial Statements for additional information.

Depreciation and amortization - for the year ended December 31, 2021, increased as a result of acquisition, expansion and development activity driving growth in our portfolio of MH communities, RV resorts and marinas as compared to 2020. Refer to Note 3, "Real Estate Acquisitions and Dispositions," of our accompanying Consolidated Financial Statements for additional information.

Loss on extinguishment of debt - for the year ended December 31, 2021, increased primarily due to the termination of the Safe Harbor line of credit and financing activities as compared to 2020. Refer to Note 8, "Debt and Line of Credit," in our accompanying Consolidated Financial Statements for additional information.

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Interest expense - for the year ended December 31, 2021, increased primarily due to the higher carrying balance of debt as compared to the same period in 2020. Refer to Note 8, "Debt and Line of Credit," of our accompanying Consolidated Financial Statements for additional information.

Gain on remeasurement of marketable securities - for the year ended December 31, 2021, increased due to higher gain on the remeasurement of our investment in marketable securities as compared to 2020. Refer to Note 15, "Fair Value of Financial Instruments," in our accompanying Consolidated Financial Statements for additional information.

Gain / (loss) on foreign currency translation - for the year ended December 31, 2021, there was a $3.7 million loss as compared to a $7.7 million gain in the same period in 2020, primarily due to fluctuations in exchange rates on Canadian and Australian denominated currencies.

Gain on dispositions of properties - for the year ended December 31, 2021, increased due to a gain resulting from the sale of six MH communities in various states. Refer to Note 3, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated Financial Statements for additional information.

Other expense, net - for the year ended December 31, 2021, increased primarily due to an estimated contingent liability related to potential termination of certain ground leases.

Gain / (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 from nonconsolidated affiliates - for the year ended December 31, 2021, increased primarily due to increased equity income at GTSC LLC ("GTSC") and the Sungenia joint venture ("Sungenia JV") as compared to 2020. Refer to Note 6, "Investments in Nonconsolidated Affiliates," in our accompanying Consolidated Financial Statements for additional information.

Preferred return to preferred OP units / equity interests - for the year ended December 31, 2021 increased primarily as a result 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 year ended December 31, 2021, increased as compared to 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.

Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019

Pursuant to the FAST Act Modernization and Simplification of Regulation S-K, discussions related to the changes in results of operations for the year ended December 31, 2020 compared to the year ended December 31, 2019 have been omitted, except for the Same Community results where the presentation structure has changed consistent with our new segment reporting, and prior year data differ from amounts previously disclosed in Form 10-K for the year ended December 31, 2020 as a result of prior year reclassification and site count changes. Such omitted discussion can be found under Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on February 18, 2021.

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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 years ended December 31, 2021, 2020 and 2019 (in thousands, except per share amounts):

(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 related to 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.

(4)Other adjustments, net include the change in estimated contingent consideration payments, long term lease termination expense and deferred tax (benefit) / expense for the years ended December 31, 2021, 2020 and 2019, RV rebranding non-recurring cost for the year ended December 31, 2021, and deferred compensation amortization upon retirement for the year ended December 31, 2020.

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LIQUIDITY AND CAPITAL RESOURCES

Short-term Liquidity

Our principal short-term liquidity demands have historically been, and are expected to continue to be, distributions to our stockholders and the unit holders of the Operating Partnership, property acquisitions, development and expansion of properties, capital improvement of properties, the purchase of new and pre-owned homes, and debt repayment. We intend to meet our short-term 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 our accompanying Consolidated Financial Statements for additional information.

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 take a disciplined approach to selecting the optimal mix of financing sources to meet our liquidity demands and minimize our overall cost of capital. In June 2021, we received investment grade ratings of BBB and Baa3 with a stable outlook from S&P Global and Moody's, respectively. We plan on leveraging this enhanced strength in the credit markets to utilize a greater proportion of unsecured debt to lower our cost of capital and increase our financial flexibility.

Acquisitions

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 lines of credit, the assumption of existing debt on properties, and the issuance of debt and equity securities. We will continue to evaluate acquisition opportunities that meet our criteria. Refer to Note 3, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated Financial Statements for information regarding recent property acquisitions.

We anticipate that our acquisition of Park Holidays will close within the three months ending March 31, 2022, subject to the approval of the UK Financial Conduct Authority. We anticipate that we will need approximately $1.3 billion in cash to fund the acquisition of Park Holidays.

We have obtained commitments from our lenders to amend, extend and upsize the Senior Credit Facility simultaneously with, and conditioned on, the closing of the acquisition of Park Holidays. The proposed amendment (the "Proposed Loan Amendment") would provide for borrowing up to an aggregate of $4.2 billion with the ability to upsize the total borrowing by an additional $800.0 million. The Proposed Loan Amendment would provide a revolving loan facility of up to $3.05 billion and a term loan facility of $1.15 billion.

We intend to use a portion of the proceeds from the Proposed Loan Amendment to fund the cash purchase price of Park Holidays. There can be no assurance that we will be able to successfully enter into the Proposed Loan Amendment on the terms described above or at all. If the Proposed Loan Amendment is not entered into, we may use our previously announced bridge loan, further described below, to fund all or a portion of the cash purchase price of Park Holidays.

Capital Expenditures

Our capital expenditures include expansion sites and development construction costs, recurring capital expenditures, lot modifications, growth projects, acquisition-related capital expenditures, rental home purchases and rebranding cost.

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Our capital expenditure activity is summarized as follows (in thousands):

Expansion and development expenditures - consist primarily of construction costs such as roads, activities, and amenities, and costs necessary to complete home and RV site improvements, such as driveways, sidewalks and landscaping at our MH communities and RV resorts. Expenditures also include costs to rebuild after damage has been incurred at MH, RV or marina properties.

Recurring capital expenditures - relate to our continued commitment to the upkeep of our MH and RV properties and include items such as dredging, dock repairs and improvements, and equipment maintenance and upgrades at our marinas.

Lot modification capital expenditures - are incurred to modify the foundational structures required to set a new home after a previous home has been removed. These expenditures are necessary to create a revenue stream from a new site renter and often improve the quality of the community. Other lot modification expenditures include land improvements added to annual RV sites to aid in the conversion of transient RV guests to annual contracts.

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.

Acquisition-related Capital Expenditures - consist of capital improvements identified during due diligence that are necessary to bring our communities, resorts, and marinas up to our operating standards. These include items such as: upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovation including larger decks, heaters, and furniture; new maintenance facilities; lot modifications; and new signage.

Rental Program - investment in the acquisition of homes intended for the Rental Program and the purchase of vacation rental homes 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.

Rebranding costs - includes new signage at our RV resorts and costs of building an RV mobile application and updated website.

Cash Flow Activities

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

Cash, cash equivalents, and restricted cash decreased by approximately $14.4 million from $92.6 million as of December 31, 2020, to $78.2 million as of December 31, 2021.

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Operating Activities - Net cash provided by operating activities increased $210.3 million to $753.6 million for the year ended December 31, 2021, compared to $543.3 million for the year ended December 31, 2020. The increase was driven by an increase in net income from property operations due to the acquisition of Safe Harbor in October 2020 and improved operating performance at our MH and RV properties.

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. Refer to "Risk Factors" in Part I, Item 1A in this Annual Report on Form 10-K.

Investing Activities - Net cash used for investing activities was $2.3 billion for the year ended December 31, 2021, compared to $2.5 billion for year ended December 31, 2020. The decrease in Net cash used for investing activities was driven by a reduction in cash outflows to acquire new properties due to the prior year acquisition of Safe Harbor. During the year ended December 31, 2021, net cash used for investing activities included the following:

•Net cash deployed of $1.6 billion to acquire 54 properties totaling over 16,800 sites, wet slips and dry storage spaces and sites for expansion, and 11 land parcels approved for development of nearly 4,000 MH sites.

•Cash deployed of $672.6 million for capital expenditure activity.

•Cash deployed of $242.6 million for issuance of notes receivable to real estate developers and operators.

•Proceeds of $162.1 million from the disposition of six MH communities.

•Proceeds of $113.8 million from sale of rental homes and equipment.

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 decreased $430.5 million to $1.6 billion for the year ended December 31, 2021, compared to $2.0 billion for the year ended December 31, 2020. During the year ended December 31, 2021, net cash provided by financing activities included the following:

•Proceeds of $1.1 billion from equity issuances, primarily due to the March 2021 underwritten public offering of an aggregate of 8,050,000 shares at a public offering price of $140.00 per share.

•Issuance of an aggregate of $1.2 billion of senior unsecured notes from issuances in June 2021 and October 2021.

•Payments of $390.8 million for distributions to holders of common stock and common OP units.

•Net payments of $198.9 million under our credit facility agreement, net of proceeds.

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.

Equity and Debt Activity

Registering of Debt Securities

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 are fully and unconditionally guaranteed by us.

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Public Equity Offerings

Offerings

On November 15 and 16, 2021, we entered into two forward sale agreements relating to an underwritten registered public offering of 4,025,000 shares of our common stock at a public offering price of $185.00 per share. The offering closed on November 18, 2021. We did not initially receive any proceeds from the sale of shares of our common stock by the forward purchaser or its affiliates. We intend to use the net proceeds, if any, received upon the future settlement of the forward sale agreements, which we expect to occur no later than November 18, 2022, to fund a portion of the Park Holidays total consideration, to repay borrowings outstanding under our senior credit facility, to fund possible future acquisitions of properties and / or for working capital and general corporate purposes.

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. 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 borrowings under our revolving line of credit.

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 these forward sales agreements 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 December 17, 2021, we entered into an At the Market Offering 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 $1.25 billion of our common stock (the "December 2021 Sales Agreement"), 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 December 2021 Sales Agreement. We simultaneously terminated our June 2021 Sales Agreement (as defined below) upon entering into the December 2021 Sales Agreement.

On June 4, 2021, we entered into an At the Market Offering Sales Agreement with certain sales agents and forward sellers pursuant to which we could sell, from time to time, up to an aggregate gross sales price of $500.0 million of our common stock (the "June 2021 Sales Agreement"), 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. We simultaneously terminated our previous At the Market Offering Sales Agreement entered into in July 2017 upon entering into the June 2021 Sales Agreement.

There were no sales of common stock under the December 2021 Sales Agreement as of December 31, 2021. We entered into forward sale agreements with respect to 1,820,109 shares of common stock under the June 2021 Sales Agreement for $356.5 million during the year ended December 31, 2021 prior to its termination. These forward sale agreements were not settled as of December 31, 2021 but we expect to settle them no later than September 2022. There were zero issuances of common stock under the prior At the Market Offering Sales Agreement entered into in July 2017, during the years ended December 31, 2021, 2020 and 2019, and from inception through termination of such prior sales agreement, we sold shares of our common stock for gross proceeds of $163.8 million.

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Senior Unsecured Notes

On October 5, 2021, we issued $450.0 million of senior unsecured notes with an interest rate of 2.3 percent and a seven-year term, due November 1, 2028 (the "2028 Notes"). Interest on the 2028 Notes is payable semi-annually in arrears on May 1 and November 1 of each year, beginning on May 1, 2022. In addition, on October 5, 2021, we issued $150 million of senior unsecured notes with an interest rate of 2.7 percent and a ten-year term due July 15, 2031. These notes are additional notes of the same series as the $600.0 million aggregate principal amount of 2.7 percent senior unsecured notes due July 15, 2031 that we issued on June 28, 2021, described below. The net proceeds from the offering were approximately $595.5 million after deducting underwriters' discounts and estimated offering expenses. The proceeds were used to pay down borrowings under our line of credit.

On June 28, 2021, we issued $600.0 million of senior unsecured notes with an interest rate of 2.7 percent and a ten-year term, due July 15, 2031 (the "2031 Notes"). Interest on the 2031 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 total outstanding balance on senior unsecured notes was $1.2 billion at December 31, 2021.

The obligations of the Operating Partnership to pay principal, premiums, if any, and interest on the 2031 and 2028 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 senior credit agreement (the "Credit Agreement") with certain lenders. The 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 Credit Agreement. We repaid all amounts due and outstanding under the Safe Harbor Facility on or prior to June 14, 2021. 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 Credit Agreement, we may borrow up to $2.0 billion under a revolving loan (the "Senior Credit Facility"). The Senior Credit Facility is available to fund all of the Company's businesses, including its marina business conducted by Safe Harbor. The 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.

The Senior 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 Senior Credit Facility is October 11, 2024, which, under the terms of the Senior Credit Agreement, may not be extended. The Senior Credit Facility bears interest at a floating rate based on the Adjusted Eurocurrency rate or BBSY rate, plus a margin that is determined based on the Company's credit ratings calculated in accordance with the Senior Credit Agreement, which can range from 0.725 percent to 1.4 percent. As of December 31, 2021, the margin based on our credit ratings was 0.85 percent on the Senior Credit Facility.

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At the lenders' option, the Senior Credit Facility will become immediately due and payable upon an event of default under the Credit Agreement. We had $1.0 billion of borrowings on the Senior Credit Facility as of December 31, 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 the Safe Harbor Facility, respectively. These balances are recorded in the Unsecured debt line item on the Consolidated Balance Sheets.

The Senior 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 Senior Credit Facility, but does reduce the borrowing amount available. At December 31, 2021 and 2020, we had approximately $2.2 million and $2.4 million (including none and $0.3 million associated with the Safe Harbor Facility) of outstanding letters of credit, respectively.

We have obtained commitments from our lender group to amend the Senior Credit Facility in connection with the acquisition of Park Holidays. Refer to Note 19, "Subsequent Events," in our accompanying Consolidated Financial Statements for additional information about the Proposed Loan Amendment.

Potential Bridge Loan

On November 13, 2021, we entered into a commitment letter with Citigroup Global Markets, Inc. ("Citigroup"), pursuant to which, and subject to certain terms and conditions (including the closing of the acquisition of Park Holidays), Citigroup (on behalf of its affiliates) committed to lend us up to £950.0 million, or approximately $1.3 billion converted at the December 31, 2021 exchange rate, under a new senior unsecured bridge loan (the "Bridge Loan"). If we enter into the Bridge Loan, the proceeds of the Bridge Loan will be used to finance a portion of the cash consideration payable for the acquisition of Park Holidays. As of December 31, 2021, we did not have any borrowings outstanding under the Bridge Loan.

Financial Covenants

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

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

As of December 31, 2021, we were in compliance with the above covenants and do not anticipate that we will be unable to comply with these covenants in the near term.

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Proactive management of transition away from LIBOR

LIBOR has been used extensively in the U.S. and globally as a reference rate for various commercial and financial contracts, including variable-rate debt and interest rate swap contracts. However, based on an announcement made by the FCA on March 3, 2021, one-week and two-month LIBOR rates ceased to be published after December 31, 2021, and all other LIBOR settings will effectively cease after June 30, 2023, and it is expected that LIBOR will no longer be used after this date. In addition, it is expected that LIBOR will no longer be used in new contracts entered into after December 31, 2021. To address the impending discontinuation of LIBOR, in the U.S. the Alternative Reference Rates Committee ("ARRC") was established to help ensure the successful transition from LIBOR to a more robust reference rate, its recommended alternative, the Secured Overnight Financing Rate (“SOFR”). SOFR is a new index calculated by reference to short-term repurchase agreements backed by U.S. Treasury securities, as its preferred replacement for U.S. dollar LIBOR. We have been closely monitoring developments related to the transition away from LIBOR and have implemented proactive measures to minimize the potential impact of the transition to the Company, specifically:

•During the year ended December 31, 2021, we issued two series of senior unsecured notes that each pay a fixed rate of interest. As of December 31, 2021, we have an aggregate balance $1.2 billion of senior unsecured notes.

•Our Senior Credit Facility agreement contains fallback language generally consistent with the ARRC's recommendation, which provides a streamlined amendment approach for negotiating a benchmark replacement.

•We continue to monitor developments by the FCA, the ARRC, and other governing bodies involved in LIBOR transition.

Refer to Item 1A. "Risk factors" in this annual report on Form 10-K for additional information about our management of risks related to the transition away from LIBOR.

Interest Rate Hedging

During and subsequent to the year ended December 31, 2021, we entered into four treasury lock contracts with an aggregate notional value of $600.0 million to hedge interest rate risk associated with future issuances of fixed-rate long-term debt.

Long-term Financing and Capital Requirements

Long-term Financing

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 December 31, 2021, of approximately $65.8 million. As of December 31, 2021, there was approximately $994.5 million of remaining capacity on the Senior Credit Facility. At December 31, 2021 we had a total of 412 unencumbered MH, RV and marina properties.

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. In the event our current credit ratings are downgraded, it may become difficult or more expensive to obtain additional financing or refinance existing unsecured indebtedness as maturities become due. Refer to "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K. 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 December 31, 2021, our net debt to enterprise value was approximately 18.0 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 8.8 years and a weighted average interest rate of 3.0 percent.

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Capital Requirements

Our capital requirements as of December 31, 2021 include both short and long term obligations:

Our primary long-term liquidity needs are principal payments on outstanding indebtedness as summarized in the table below:

(1)Our outstanding indebtedness in this table excludes debt premiums, discounts and deferred financing costs, as applicable.

(2)Our obligations related to interest expense are calculated based on the current debt levels, rates and maturities as of December 31, 2021 (including finance leases), and actual payments required in future periods may be different than the amounts included above. Perpetual securities include one year of interest expense for payment due after five years.

Certain of our nonconsolidated affiliates, which are accounted for under the equity-method of accounting, have incurred indebtedness. We have not guaranteed the debt of our nonconsolidated affiliates in the arrangements referenced below, nor do we have any obligations to fund this debt should the nonconsolidated affiliates be unable to do so. Refer to Note 6, "Investments in Nonconsolidated Affiliates," in the accompanying Consolidated Financial Statements for additional information about these entities.

GTSC - During September 2019, GTSC, entered into a warehouse line of credit with a maximum loan amount of $125.0 million. During September 2020, May 2021 and December 2021, the maximum amount was increased to $180.0 million, $230.0 million and $255.0 million, respectively, with an option to increase to $275.0 million subject to the lender's consent. As of December 31, 2021, the aggregate carrying amount of debt, including both our and our partner's share, incurred by GTSC was $243.1 million (of which our proportionate share is $97.2 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 a Commercial Paper or adjusted Secured Overnight Financing Rate plus 1.65 percent per annum and matures on December 15, 2025.

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 $19.6 million converted at the December 31, 2021 exchange rate. As of December 31, 2021, the aggregate carrying amount of debt, including both our and our partners' share, incurred by Sungenia JV was $6.3 million (of which our proportionate share is $3.1 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.

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SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES

Critical Accounting Estimates

Our Consolidated Financial Statements are prepared in accordance with United States of America generally accepted accounting principles ("GAAP"), which require the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

Our significant accounting estimates include acquisitions (of investment properties) and impairment (of long live assets or properties, right-of-use assets and goodwill). Refer to Note 1, "Significant Accounting Policies," in our accompanying Consolidated Financial Statements for information regarding our critical accounting estimates that affect the Consolidated Financial Statements and that use judgments and assumptions. In addition, the likelihood that materially different amounts could be reported under varied conditions and assumptions is discussed.

Impact of New Accounting Standards

Refer to Note 18, "Recent Accounting Pronouncements," in our accompanying Consolidated Financial Statements for information regarding new accounting pronouncements.

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