# SUN COMMUNITIES INC (SUI) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from SUN COMMUNITIES INC's 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/912593/000091259325000086/sui-20241231.htm
Accession: 0000912593-25-000086
Filing date: 2025-02-28
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high

Company profile: /company/SUI/
All MD&A years: /company/SUI/mda/
Previous year: /company/SUI/mda/fy2023/ (FY 2023)
Next year: /company/SUI/mda/fy2025/ (FY 2025)

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 information as supplemental performance measures. Refer to Non-GAAP Financial Measures in this Item 7 for additional information.

OVERVIEW AND OUTLOOK

We are a fully integrated REIT. As of December 31, 2024, we owned and operated, directly or indirectly, or had an interest in, a portfolio of 645 developed properties located in the U.S., Canada, and the UK including 288 MH communities, 166 RV communities, 138 marinas and 53 UK communities.

We have been in the business of acquiring, operating, developing and expanding MH and RV communities since 1975, marinas since 2020, and communities in the UK since 2022. We lease individual parcels of land, or sites, with utility access for the placement of manufactured homes and RVs to our MH, RV, and UK customers. Our MH communities are designed to offer affordable housing to individuals and families, while also providing certain amenities. In the U.S., we also market, sell, and lease 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. Our RV communities are designed to offer affordable vacation opportunities to individuals and families complemented by a diverse selection of high-quality amenities. The majority of our marinas are concentrated in coastal regions. Our marinas offer wet slip and dry storage space leases, end-to-end service (such as routine maintenance, repair, and winterization), fuel sales, and other high-end amenities. These services and amenities offer convenience and resort-quality experiences to our members and guests. In the UK, our Park Holidays communities are referred to as "holiday parks" and are located predominantly at irreplaceable seaside destinations in the south of England. We provide holiday home sales and associated site license activities to holiday homeowners in our communities.

Historically, a large component of our growth was driven by acquisitions as we opportunistically purchased high-quality MH, RV, Marina, and UK properties. With the benefit of our expanded portfolio, beginning in 2023, we shifted our strategy toward optimizing the value of our existing businesses through achieving strong rental rate growth and operating efficiencies, while still pursuing select new acquisition and expansion opportunities. This strategy continued in 2024 as we determined to divest non-strategic assets and focus on simplification of our operations and capital structure. During the year ended December 31, 2024, we sold 25 properties and three development properties for a total gross sales price of $476.8 million and commenced an internal restructuring initiative. We remain focused on maximizing Real property income, Same Property NOI growth, and Core FFO per share growth, which we believe will enhance long-term shareholder value.

Leadership Change

In November 2024, Gary A. Shiffman informed the Board of his intent to retire as CEO by no later than December 31, 2025. The Board of Directors has established a CEO Succession Planning Committee to conduct a comprehensive search process to identify a new CEO.

Catastrophic Event - Hurricanes Helene and Milton

In September and October 2024, Hurricane Helene and Hurricane Milton, respectively, made landfall in Florida and subsequently impacted several of our properties in the Southeastern and Mid-Atlantic regions of the U.S. During the year ended December 31, 2024, we recognized charges of $13.9 million for debris removal and clean-up at several of our MH and RV communities, and charges of $4.4 million for impaired assets at several of our marinas, which were recorded within Catastrophic event-related charges, net on the Consolidated Statements of Operations. We maintain property, casualty, flood, and business interruption insurance for our properties, subject to customary deductibles and limits.

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SUN COMMUNITIES, INC.

EXECUTIVE SUMMARY

2024 General Overview

Key operational and financial highlights included the following:

•Total revenues for 2024 were $3.2 billion, consistent with 2023 total revenues.

•Net income attributable to SUI common shareholders was $89.0 million, as compared to a net loss attributable to SUI common shareholders of $213.3 million in the prior year, driven primarily by Same Property NOI generation and gains on dispositions of assets.

•Achieved annual Core FFO of $6.81 per diluted share and OP unit.

•Achieved Real property Same Property NOI growth of 6.7% for MH, 5.4% for Marina and 9.0% for the UK over 2023. For the RV segment, we experienced a decline in Same Property NOI growth of 2.8%, driven by lower than anticipated real property - transient revenues and an increase in supplies and repair expenses and other expenses.

•Increased Same Property adjusted blended occupancy for MH and RV by 160 basis points to 99.0% as compared to 97.4% in 2023.

•Entered into and settled all outstanding forward sale agreements with respect to 2,713,571 shares of common stock under our At the Market Offering Sales Agreement. Net proceeds of $361.7 million were used to repay borrowings outstanding under our senior credit facility.

•Closed an offering of underwritten senior unsecured notes of $500.0 million for net proceeds of $495.4 million of which a majority of the net proceeds were used to reduce floating-rate debt.

•Completed the disposition of non-strategic properties valued at $476.8 million in aggregate, including an exit from two states.

•Reduced our Net debt / trailing twelve month recurring EBITDA ratio to 6.0x as of December 31, 2024 (from 6.1x in the prior year) and reduced floating rate debt exposure to 8.6% as of December 31, 2024 (from 16.4% as of December 31, 2023).

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 Property communities continue to achieve revenue and occupancy increases which drive continued NOI growth. Our Same Property marinas and UK communities achieved revenue increases which contributed to our NOI growth.

[[GREPCENT_TABLE]]
[["","","Year Ended"],["Portfolio Information:","","December 31, 2024","","December 31, 2023","","December 31, 2022"],["Occupancy % - Total Portfolio - MH and Annual RV Occupancy(1)","","97.0","%","","96.4","%","","96.0","%"],["Occupancy % - Same Property - Adjusted MH and Annual RV Occupancy(1)(2)(3)","","99.0","%","","97.4","%","","96.6","%"],["Core FFO per share","","$","6.81","","","$","7.10","","","$","7.35"],["Real property NOI - Total Portfolio (in millions)","","$","1,305.4","","","$","1,249.4","","","$","1,151.8"],["Real property NOI - Same Property (in millions) - MH, RV, and Marina(3)","","$","1,170.3","","","$","1,124.8","","","$","1,061.9"],["Real property NOI - Same Property (in millions) - UK","","$","76.0","","","$","69.8","","","N/A"],["Home sales volume - North America","","2,001","","","2,565","","","3,212"],["Home sales volume - UK(4)","","2,948","","","2,857","","","2,343"]]
[[/GREPCENT_TABLE]]

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

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

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

(4) UK amounts for the year ended December 31, 2022 cover the period from April 8, 2022 (date of acquisition) through December 31, 2022.

Acquisition Activity

During the year ended December 31, 2024, we acquired three marinas and three marina expansion assets with an aggregate of 925 wet slips and dry storage spaces for an aggregate purchase price of approximately $63.8 million. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for details of our acquisition activities.

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Disposition Activity

Management continually evaluates properties within the portfolio for potential disposition opportunities. When a given property no longer fits our desired growth profile, we seek to redeploy capital to properties and geographies fit to provide greater future returns. From time to time, strategic reductions to the portfolio are necessary to reduce exposure to less desirable locations and support our long-term positioning. In 2024, we expanded our disposition program as part of our strategy to focus on simplification of our operations and capital structure.

During the year ended December 31, 2024, we sold 25 communities located in the U.S, Canada, and the U.K., with 6,526 sites for $426.6 million. In addition, we sold three development properties in the U.S. for total consideration of $50.2 million. Refer to Note 3, "Real Estate Acquisitions and Dispositions," for details on the disposition activities.

Markets

Our MH and RV properties are largely concentrated in the U.S. in Florida, Michigan, Texas, and California, which collectively contain 63.9% of our total MH and RV sites. We have expanded our market share in multiple states through acquisitions and increased our property holdings in high-growth areas of the U.S. including retirement and vacation destinations. The age demographic of RV communities is attractive, as the population of retirement age adults in the U.S. is growing. RV communities have become a trending vacation opportunity not only for the retiree population, but as an affordable vacation alternative for families and millennials.

The majority of our marinas are concentrated in coastal regions, and other marinas are located in various inland regions. Our Marina properties are largely concentrated in the U.S. in Florida and California, which collectively contain 23.6% of our total wet slips and dry storage spaces.

Our UK properties are located in irreplaceable coastal destination locations that are a short drive from London and other urban locations. Our UK properties are largely concentrated in England, which contain 93.3% of our total holiday parks.

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

[[GREPCENT_TABLE]]
[["","","December 31, 2024","","December 31, 2023"],["Major Market","","Number of Properties","","Total Sites","","% of Total Sites","","Number of Properties","","Total Sites","","% of Total Sites"],["Florida","","127","","","45,450","","","29.4","%","","129","","","44,410","","","28.1","%"],["Michigan","","85","","","33,530","","","21.7","%","","85","","","33,500","","","21.2","%"],["California","","37","","","8,830","","","5.7","%","","37","","","8,800","","","5.6","%"],["Texas","","29","","","10,910","","","7.1","%","","29","","","10,820","","","6.8","%"],["Connecticut","","16","","","2,000","","","1.3","%","","16","","","2,000","","","1.3","%"],["Maine","","15","","","3,530","","","2.3","%","","15","","","3,540","","","2.2","%"],["Arizona","","11","","","5,000","","","3.2","%","","13","","","5,510","","","3.5","%"],["Indiana","","11","","","3,960","","","2.6","%","","12","","","4,180","","","2.6","%"],["New Jersey","","11","","","4,000","","","2.6","%","","11","","","4,040","","","2.6","%"],["Colorado","","11","","","3,880","","","2.5","%","","11","","","3,890","","","2.5","%"],["Virginia","","10","","","3,710","","","2.4","%","","10","","","3,450","","","2.2","%"],["New York","","10","","","3,180","","","2.1","%","","10","","","2,940","","","1.9","%"],["Other","","81","","","26,380","","","17.1","%","","99","","","30,920","","","19.5","%"],["Total","","454","","","154,360","","","100.0","%","","477","","","158,000","","","100.0","%"]]
[[/GREPCENT_TABLE]]

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

[[GREPCENT_TABLE]]
[["","","December 31, 2024","","December 31, 2023"],["Major Market","","Number of Properties","","Wet Slips and Dry Storage Spaces","","% Wet Slips and Dry Storage Spaces","","Number of Properties","","Wet Slips and Dry Storage Spaces","","% Wet Slips and Dry Storage Spaces"],["Florida","","21","","","5,060","","","10.4","%","","21","","","5,200","","","10.8","%"],["California","","12","","","6,440","","","13.2","%","","11","","","5,710","","","11.9","%"],["Rhode Island","","12","","","3,460","","","7.1","%","","12","","","3,460","","","7.2","%"],["Connecticut","","12","","","3,580","","","7.3","%","","11","","","3,330","","","6.9","%"],["New York","","9","","","2,970","","","6.1","%","","9","","","3,020","","","6.3","%"],["Maryland","","9","","","2,400","","","4.9","%","","9","","","2,480","","","5.2","%"],["Massachusetts","","9","","","2,540","","","5.2","%","","9","","","2,520","","","5.2","%"],["Other","","54","","","22,310","","","45.8","%","","53","","","22,310","","","46.5","%"],["Total","","138","","","48,760","","","100.0","%","","135","","","48,030","","","100.0","%"]]
[[/GREPCENT_TABLE]]

The following table identifies our holiday park markets in the UK by total sites:

[[GREPCENT_TABLE]]
[["","","December 31, 2024","","December 31, 2023"],["Major Market","","Number of Properties","","Total Sites","","% of Total Sites","","Number of Properties","","Total Sites","","% of Total Sites"],["England","","50","","","20,560","","","93.3","%","","49","","","19,610","","","92.0","%"],["Scotland","","1","","","810","","","3.7","%","","4","","","1,060","","","5.0","%"],["Wales","","2","","","660","","","3.0","%","","2","","","640","","","3.0","%"],["Total","","53","","","22,030","","","100.0","%","","55","","","21,310","","","100.0","%"]]
[[/GREPCENT_TABLE]]

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

Total Portfolio NOI - NOI is derived from property 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 NOI provides enhanced comparability for investor evaluation of properties' performance and growth over time.

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.

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SUN COMMUNITIES, INC.

Same Property NOI - This is a management tool used when evaluating the performance and growth of our Same Property portfolio. We define same properties as those we have owned and operated continuously since January 1, 2023. Same properties exclude ground-up development properties, acquired properties and properties sold after December 31, 2022. The Same Property data may change from time-to-time depending on acquisitions, dispositions, management discretion, significant transactions or unique situations. Same Property NOI does not include the revenues and expenses related to home sales, and service, retail, dining and entertainment activities at the properties. We believe that Same Property NOI is helpful to investors as a supplemental comparative performance measure of the income generated from the Same Property portfolio from one period to the next.

FFO

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 certain real estate assets, plus real estate related depreciation and amortization, impairments of certain real estate assets and investments, 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, real estate related to impairment, and 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.

Core FFO - In addition, we 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 FFO and Core FFO provide 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 financial performance measure or GAAP cash flow from operating activities as a measure of our liquidity. 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. Furthermore, 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 / (Loss) attributable to Sun Communities, Inc. common shareholders to NOI and summarize our consolidated financial results for the years ended December 31, 2024, 2023, and 2022 (in millions):

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2024","","December 31, 2023","","December 31, 2022"],["Net Income / (Loss) Attributable to SUI Common Shareholders","","$","89.0","","","$","(213.3)","","","$","242.0"],["Interest income","","(20.7)","","","(45.4)","","","(35.2)"],["Brokerage commissions and other revenues, net","","(40.2)","","","(60.6)","","","(34.9)"],["General and administrative","","295.3","","","272.1","","","257.4"],["Catastrophic event-related charges, net","","27.1","","","3.8","","","17.5"],["Business combination expense","","0.4","","","3.0","","","24.7"],["Depreciation and amortization","","680.7","","","660.0","","","601.8"],["Asset impairments","","71.4","","","10.1","","","3.0"],["Goodwill impairment","","180.8","","","369.9","","","\u2014"],["Loss on extinguishment of debt (see Note 9)","","1.4","","","\u2014","","","4.4"],["Interest expense","","350.4","","","325.8","","","229.8"],["Interest on mandatorily redeemable preferred OP units / equity","","\u2014","","","3.3","","","4.2"],["Loss on remeasurement of marketable securities (see Note 15)","","\u2014","","","16.0","","","53.4"],["(Gain) / loss on foreign currency exchanges","","25.8","","","0.3","","","(5.4)"],["Gain on dispositions of properties","","(202.9)","","","(11.0)","","","(12.2)"],["Other (income) / expense, net","","(3.2)","","","7.5","","","2.1"],["Loss on remeasurement of notes receivable (see Note 4)","","36.4","","","106.7","","","0.8"],["Income from nonconsolidated affiliates (see Note 7)","","(9.5)","","","(16.0)","","","(2.9)"],["(Gain) / loss on remeasurement of investment in nonconsolidated affiliates (see Note 7)","","(6.6)","","","4.2","","","2.7"],["Current tax expense (see Note 13)","","4.3","","","14.5","","","10.3"],["Deferred tax benefit (see Note 13)","","(39.6)","","","(22.9)","","","(4.2)"],["Add: Preferred return to preferred OP units / equity interests","","12.8","","","12.3","","","11.0"],["Add: Income / (loss) attributable to noncontrolling interests","","5.3","","","(8.1)","","","10.8"],["NOI","","$","1,458.4","","","$","1,432.2","","","$","1,381.1"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","","Year Ended"],["","","December 31, 2024","","December 31, 2023","","December 31, 2022"],["Real property NOI","","$","1,305.4","","","$","1,249.4","","","$","1,163.0"],["Home sales NOI","","96.8","","","114.3","","","143.4"],["Service, retail, dining and entertainment NOI","","56.2","","","68.5","","","74.7"],["NOI","","$","1,458.4","","","$","1,432.2","","","$","1,381.1"]]
[[/GREPCENT_TABLE]]

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SUN COMMUNITIES, INC.

Seasonality of Revenue

The RV, Marina, and UK segments are seasonal 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. In the UK segment, vacation rental sites generally produce higher revenues between March and October. The following table presents the seasonality of real property-transient revenue for the years ended December 31, 2024, 2023, and 2022:

[[GREPCENT_TABLE]]
[["","","Real property - transient revenue (in millions)","","For the Three Months Ended"],["Year","","","March 31","","June 30","","September 30","","December 31","","Total"],["2024","","$","296.4","","","12.7","%","","27.6","%","","46.6","%","","13.1","%","","100.0","%"],["2023","","$","321.4","","","12.4","%","","27.8","%","","47.3","%","","12.5","%","","100.0","%"],["2022","","$","334.5","","","12.7","%","","27.8","%","","45.8","%","","13.7","%","","100.0","%"]]
[[/GREPCENT_TABLE]]

In the Marina segment, the majority of our wet slip and dry storage space leases have annual terms that are billed seasonally. Wet slip storage increases during the summer months for the boating season, whereas dry storage increases during the winter season as weather patterns require boat owners to store their vessels on dry docks or within covered racks. The following table presents the seasonality of Marina real property revenue for the years ended December 31, 2024, 2023, and 2022:

[[GREPCENT_TABLE]]
[["","","Seasonal real property revenue(in millions)","","For the Three Months Ended"],["Year","","","March 31","","June 30","","September 30","","December 31","","Total"],["2024","","$","371.6","","","21.0","%","","25.8","%","","28.1","%","","25.1","%","","100.0","%"],["2023","","$","348.7","","","20.8","%","","25.9","%","","28.6","%","","24.7","%","","100.0","%"],["2022","","$","310.2","","","20.1","%","","25.6","%","","29.0","%","","25.3","%","","100.0","%"]]
[[/GREPCENT_TABLE]]

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Real Property Operations - Total Portfolio

The following tables reflect certain financial and other information for our real estate operations by segment as of and for the years ended December 31, 2024 and 2023 (in millions, except for statistical information):

[[GREPCENT_TABLE]]
[["","Year Ended December 31, 2024","","Year Ended December 31, 2023"],["Financial Information","MH","","RV","","Marinas","","UK","","Total","","MH","","RV","","Marinas","","UK","","Total"],["Revenues"],["Real property (excluding transient)","$","956.2","","$","318.8","","","$","432.6","","$","132.2","","","$","1,839.8","","$","906.1","","$","287.1","","","$","406.8","","$","114.2","","$","1,714.2"],["Real property - transient","1.2","","249.7","","","27.7","","45.0","","","323.6","","1.4","","277.3","","","24.8","","42.1","","345.6"],["Total operating revenues","957.4","","568.5","","","460.3","","177.2","","","2,163.4","","907.5","","564.4","","","431.6","","156.3","","2,059.8"],["Expenses"],["Property operating expenses","314.1","","275.6","","","170.2","","98.1","","","858.0","","296.9","","265.1","","","158.8","","89.6","","810.4"],["Real Property NOI","$","643.3","","$","292.9","","","$","290.1","","$","79.1","","","$","1,305.4","","$","610.6","","$","299.3","","","$","272.8","","$","66.7","","$","1,249.4"],["","As of December 31, 2024","","As of December 31, 2023"],["Other Information","MH","","RV","","Marinas","","UK","","Total","","MH","","RV","","Marinas","","UK","","Total"],["Number of Properties","288","","166","","138","","53","","645","","298","","179","","135","","55","","667"],["Sites, Wet Slips and Dry Storage Spaces"],["Sites, wet slips and dry storage spaces(a)","97,430","","32,100","","48,760","","17,690","","195,980","","100,320","","32,390","","48,030","","18,110","","198,850"],["Transient sites","N/M","","24,830","","N/A","","4,340","","29,170","","N/M","","25,290","","N/A","","3,200","","28,490"],["Total","97,430","","56,930","","48,760","","22,030","","225,150","","100,320","","57,680","","48,030","","21,310","","227,340"],["Occupancy","97.3","%","","100.0","%","","N/A","","89.7","%","","97.0","%","","96.6","%","","100.0","%","","N/A","","89.5","%","","96.4","%"]]
[[/GREPCENT_TABLE]]

N/M = Not meaningful.

N/A = Not applicable.

(a) MH annual sites included 11,214 and 10,237 rental homes in our Rental Program at December 31, 2024 and 2023, respectively. Our investment in occupied rental homes at December 31, 2024 was $783.0 million, an increase of 12.3% from $697.1 million at December 31, 2023.

For the year ended December 31, 2024, the $56.0 million, or 4.5% increase in Real Property NOI as compared to the same period in 2023, consists of an increase of $39.9 million from Same Property MH, an increase of $13.6 million from Same Property Marina, an increase of $6.2 million from Same Property UK, and an increase of $4.3 million, net from other recently acquired or developed properties, partially offset by a decrease of $8.0 million from Same Property RV.

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Real Property Operations - Same Property Portfolio

Same Property 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 Property 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 Property portfolio, management has classified certain items differently than our GAAP statements. The reclassification difference between our GAAP statements and our Same Property 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. Additionally, for the MH, RV, and UK segments, the amounts in the tables below reflect constant currency for comparative purposes. Additionally, prior period Canadian dollar and pound sterling currency figures have been translated at 2024 average exchange rates for constant currency comparability.

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Real Property Operations - North America Same Property Portfolio

The following tables reflect certain financial and other information for our Same Property MH, RV, and Marina portfolios as of and for the years ended December 31, 2024 and 2023 (in millions, except for statistical information).

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2024","","December 31, 2023","","Total Change","","% Change(c)"],["","MH(a)","","RV(a)","","Marina","","Total","","MH(a)","","RV(a)","","Marina","","Total","","","MH","","RV","","Marina","","Total(d)"],["Financial Information"],["Same Property Revenues"],["Real property (excluding transient)","$","865.6","","","$","281.3","","","$","373.9","","","$","1,520.8","","","$","810.5","","","$","253.3","","","$","353.9","","","$","1,417.7","","","$","103.1","","","6.8","%","","11.1","%","","5.7","%","","7.3","%"],["Real property - transient","1.2","","","222.4","","","26.8","","","250.4","","","1.3","","","249.9","","","24.5","","","275.7","","","(25.3)","","","(9.2)","%","","(11.0)","%","","9.2","%","","(9.2)","%"],["Total Same Property operating revenues","866.8","","","503.7","","","400.7","","","1,771.2","","","811.8","","","503.2","","","378.4","","","1,693.4","","","77.8","","","6.8","%","","0.1","%","","5.9","%","","4.6","%"],["Same Property Expenses"],["Same Property operating expenses(b)(d)","235.2","","","231.3","","","134.4","","","600.9","","","220.1","","","222.8","","","125.7","","","568.6","","","32.3","","","6.8","%","","3.8","%","","6.9","%","","5.7","%"],["Real Property NOI(d)","$","631.6","","","$","272.4","","","$","266.3","","","$","1,170.3","","","$","591.7","","","$","280.4","","","$","252.7","","","$","1,124.8","","","$","45.5","","","6.7","%","","(2.8)","%","","5.4","%","","4.1","%"],["Other Information"],["Number of properties","283","","","150","","","127","","","560","","","283","","","150","","","127","","","560"],["Sites, wet slips and dry storage spaces","96,640","","","52,690","","","43,350","","","192,680","","","96,370","","","52,110","","","43,460","","","191,940"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2023","","December 31, 2022","","Total Change","","% Change(c)"],["","MH(a)","","RV(a)","","Marina","","Total","","MH(a)","","RV(a)","","Marina","","Total","","","MH","","RV","","Marina","","Total(d)"],["Financial Information"],["Same Property Revenues"],["Real property (excluding transient)","$","830.4","","","$","263.8","","","$","326.0","","","$","1,420.2","","","$","776.2","","","$","228.1","","","$","302.4","","","$","1,306.7","","","$","113.5","","","7.0","%","","15.6","%","","7.8","%","","8.7","%"],["Real property - transient","1.6","","","256.2","","","21.7","","","279.5","","","1.2","","","275.4","","","16.4","","","293.0","","","(13.5)","","","25.9","%","","(7.0)","%","","32.6","%","","(4.6)","%"],["Total Same Property operating revenues","832.0","","","520.0","","","347.7","","","1,699.7","","","777.4","","","503.5","","","318.8","","","1,599.7","","","100.0","","","7.0","%","","3.3","%","","9.1","%","","6.2","%"],["Same Property Expenses"],["Same Property operating expenses(b)(d)","223.8","","","224.7","","","112.1","","","560.6","","","208.2","","","221.7","","","107.9","","","537.8","","","22.8","","","7.5","%","","1.4","%","","3.9","%","","4.2","%"],["Real Property NOI(d)","$","608.2","","","$","295.3","","","$","235.6","","","$","1,139.1","","","$","569.2","","","$","281.8","","","$","210.9","","","$","1,061.9","","","$","77.2","","","6.8","%","","4.8","%","","11.7","%","","7.3","%"],["Other Information"],["Number of properties","288","","","160","","","119","","","567","","","288","","","160","","","119","","","567"],["Sites, wet slips and dry storage spaces","98,620","","","54,370","","","40,890","","","193,880","","","98,340","","","54,400","","","41,000","","","193,740"]]
[[/GREPCENT_TABLE]]

(a) Same Property results for our MH and RV properties reflect constant currency for comparative purposes. Canadian currency figures in the prior comparative period have been translated at the average exchange rate during the years ended December 31, 2024 and 2023 of $0.7302 and $0.7418 USD per Canadian dollar, respectively.

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SUN COMMUNITIES, INC.

Real Property Operations - North America Same Property Portfolio (Continued)

(b) We net certain utilities revenues (which include utility reimbursement revenues from residents) against related utility expenses in property operating expenses as follows (in millions):

[[GREPCENT_TABLE]]
[["","Year Ended December 31, 2024","","Year Ended December 31, 2023"],["","MH","","RV","","Marina","","Total","","MH","","RV","","Marina","","Total"],["Utility revenue netted against related utility expense","$","71.5","","","$","18.9","","","$","24.5","","","$","114.9","","","$","67.9","","","$","18.5","","","$","23.8","","","$","110.2"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","Year Ended December 31, 2023","","Year Ended December 31, 2022"],["","MH","","RV","","Marina","","Total","","MH","","RV","","Marina","","Total"],["Utility revenue netted against related utility expense","$","68.3","","","$","19.3","","","$","22.7","","","$","110.3","","","$","63.8","","","$","18.1","","","$","19.2","","","$","101.1"]]
[[/GREPCENT_TABLE]]

(c) Percentages are calculated based on unrounded numbers.

(d) Total Same Property operating expenses consist of the following components for the periods shown (in millions), and exclude amounts invested into recently acquired properties to bring them up to our standards.

[[GREPCENT_TABLE]]
[["","Year Ended","","Year Ended"],["","December 31, 2024","","December 31, 2023","","Change","","% Change(c)","","December 31, 2023","","December 31, 2022","","Change","","% Change(c)"],["Payroll and benefits","$","193.3","","","$","194.3","","","$","(1.0)","","","(0.5)","%","","$","190.6","","","$","181.6","","","$","9.0","","","5.0","%"],["Real estate taxes","113.4","","","107.1","","","6.3","","","5.9","%","","107.2","","","103.1","","","4.1","","","4.0","%"],["Supplies and repairs","85.1","","","73.8","","","11.3","","","15.3","%","","75.2","","","78.9","","","(3.7)","","","(4.7)","%"],["Utilities","66.1","","","63.0","","","3.1","","","4.9","%","","64.7","","","67.0","","","(2.3)","","","(3.4)","%"],["Legal, state / local taxes, and insurance","55.0","","","55.6","","","(0.6)","","","(1.3)","%","","55.8","","","39.2","","","16.6","","","42.3","%"],["Other","88.0","","","74.8","","","13.2","","","17.6","%","","67.1","","","68.0","","","(0.9)","","","(1.4)","%"],["Total Same Property Operating Expenses","$","600.9","","","$","568.6","","","$","32.3","","","5.7","%","","$","560.6","","","$","537.8","","","$","22.8","","","4.2","%"]]
[[/GREPCENT_TABLE]]

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SUN COMMUNITIES, INC.

North America Same Property Summary

[[GREPCENT_TABLE]]
[["","As of","","As of"],["","December 31, 2024","","December 31, 2023","","December 31, 2023","","December 31, 2022"],["","MH","","RV","","MH","","RV","","MH","","RV","","MH","","RV"],["Other Information"],["Number of Properties","283","","150","","283","","150","","288","","160","","288","","160"],["Sites"],["MH and Annual RV sites","96,640","","31,070","","96,370","","29,400","","98,620","","32,090","","98,340","","30,030"],["Transient RV sites","N/M","","21,620","","N/M","","22,710","","N/M","","22,280","","N/M","","24,370"],["Total","96,640","","52,690","","96,370","","52,110","","98,620","","54,370","","98,340","","54,400"],["MH & Annual RV Occupancy"],["Occupancy(a)","97.6","%","","100.0","%","","97.1","%","","100.0","%","","97.3","%","","100.0","%","","96.6","%","","100.0","%"],["Average monthly base rent per site","$","708","","","$","654","","","$","671","","","$","617","","","$","670","","","$","593","","","$","630","","","$","546"],["% change in monthly base rent(b)","5.5","%","","6.0","%","","N/A","","N/A","","6.4","%","","8.7","%","","N/A","","N/A"],["Rental Program Statistics included in MH:"],["Number of occupied sites, end of period(c)","10,630","","","N/A","","9,830","","N/A","","10,010","","","N/A","","9,310","","N/A"],["Monthly rent per site - MH Rental Program","$","1,344","","","N/A","","$","1,300","","N/A","","$","1,292","","","N/A","","$","1,221","","N/A"],["% change(c)","3.4","%","","N/A","","N/A","","N/A","","5.8","%","","N/A","","N/A","","N/A"]]
[[/GREPCENT_TABLE]]

N/M = Not meaningful. N/A = Not applicable.

(a) Same Property adjusted blended occupancy for MH and RV increased to 99.0% at December 31, 2024, from 97.4% at December 31, 2023. The 160 basis point increase was driven by MH expansion fills and the conversion of transient RV sites to annual sites. Same Property blended occupancy for MH and RV was 98.2% at December 31, 2024, up 40 basis points from 97.8% at December 31, 2023. Same Property blended occupancy for MH and RV increased by 50 basis points at 97.9% at December 31, 2023 from 97.4% December 31, 2022.

(b) Calculated using actual results without rounding.

(c) Occupied rental program sites in Same Property are included in total sites.

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SUN COMMUNITIES, INC.

Real Property Operations - UK Same Property Portfolio

The following tables reflect certain financial and other information for our Same Property UK portfolio as of and for the years ended December 31, 2024 and 2023 (in millions, except for statistical information):

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2024","","December 31, 2023","","% Change(b)"],["Financial Information(a)"],["Same Property Revenues"],["Real property (excluding transient)","$","102.4","","$","95.5","","7.2","%"],["Real property - transient","44.7","","42.7","","4.8","%"],["Total Same Property operating revenues","147.1","","138.2","","6.5","%"],["Same Property Expenses"],["Same Property operating expenses(c)","71.1","","68.4","","3.9","%"],["Real Property NOI","$","76.0","","$","69.8","","9.0","%"],["Other Information"],["Number of properties","51","","51","","\u2014"]]
[[/GREPCENT_TABLE]]

(a) Same Property results for our UK properties reflect constant currency for comparative purposes. Pound sterling figures in the prior comparative period have been translated at the average exchange rate of $1.2781 USD per GBP, during year ended December 31, 2024.

(b) Percentages are calculated based on unrounded numbers.

(c) We net certain utility revenues (which include utility reimbursement revenues from residents) against related utility expenses in property operating expenses as follows (in millions):

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2024","","December 31, 2023"],["Utility revenue netted against related utility expense","$","17.9","","$","16.8"]]
[[/GREPCENT_TABLE]]

UK Same Property Summary

[[GREPCENT_TABLE]]
[["","","As of"],["","","December 31, 2024","","December 31, 2023","","Change(b)"],["Other Information"],["Number of Properties","","51","","51","","","\u2014"],["Sites"],["UK","","16,500","","","16,210","","","290"],["UK Transient","","3,210","","","3,120","","","90"],["Occupancy(a)","","89.6","%","","90.3","%","","(0.7)","%"],["Average monthly base rent per site","","$","544","","","$","502","","","$","42"]]
[[/GREPCENT_TABLE]]

(a) Adjusting for recently delivered and vacant expansion sites, Same Property adjusted occupancy decreased by 50 basis points year over year, to 89.9% at December 31, 2024, from 90.4% at December 31, 2023.

(b) Calculated using actual results without rounding.

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SUN COMMUNITIES, INC.

For the years ended December 31, 2024 and 2023:

•The Same Property data includes all properties that we have owned and operated continuously since January 1, 2023 exclusive of ground-up development and redevelopment properties recently completed or under construction, and other properties as determined by management.

•The MH segment's increase in NOI of $39.9 million, or 6.7% when compared to the same period in 2023, is primarily due to an increase in Real property (excluding transient) revenue of $55.1 million, or 6.8%. Real property (excluding transient and other) revenue increased primarily due to a 5.5% increase in monthly base rent.

•The RV segment's decrease in NOI of $8.0 million, or 2.8% when compared to the same period in 2023, is primarily due to a decrease in Real property transient revenue of $27.5 million, or 11.0% and an increase in Same Property operating expenses of $8.5 million or 3.8%, partially offset by an increase in Real property (excluding transient) revenue of $28.0 million, or 11.1%. The increase in Same Property operating expenses was primarily due to an increase in supplies and repairs expense and other expenses. The increase in Real property (excluding transient) revenue was primarily due to a 6.0% increase in monthly base rent and conversions of transient RV sites to annual RV sites.

•The Marina segment increase in NOI of $13.6 million, or 5.4% when compared to the same period in 2023, is primarily due to a $20.0 million, or 5.7% increase in Real property (excluding transient) revenue, partially offset by an increase in Same Property operating expenses of $8.7 million, or 6.9%.

•The UK segment increase in NOI of $6.2 million, or 9.0%, when compared to the same period in 2023 is primarily due to a $6.9 million, or 7.2%, increase in Real property (excluding transient) revenue partially offset by an increase in Same Property operating expenses of $2.7 million, or 3.9%. The increase in Real property (excluding transient) revenue was primarily due to an 8.4% increase in monthly base rent per site.

For the years ended December 31, 2023 and 2022:

•The Same Property data includes all properties that we owned and operated continuously since January 1, 2022, exclusive of ground-up development and redevelopment properties recently completed or under construction, and other properties as determined by management.

•The MH segment's increase in NOI of $39.0 million, or 6.8% when compared to the same period in 2022, is primarily due to an increase in Real property (excluding transient) revenue of $54.2 million, or 7.0%. Real property (excluding transient) revenue increased due to a 6.4% increase in monthly base rent.

•The RV segment's increase in NOI of $13.5 million, or 4.8% when compared to the same period in 2022, is primarily due to an increase in Real property (excluding transient) revenue of $35.7 million, or 15.6%, primarily due to an 8.7% increase in monthly base rent and conversions of transient RV sites to annual RV sites.

•The Marina segment increase in NOI of $24.7 million, or 11.7% when compared to the same period in 2022, is primarily due to a $23.6 million, or 7.8% increase in Real property (excluding transient) revenue.

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SUN COMMUNITIES, INC.

Home Sales Summary

We sell new and pre-owned homes to current and prospective residents and customers in our communities. This inventory is purchased from manufacturers, lenders, dealers, former residents or customers.

The following table reflects certain financial and statistical information for our home sales program for the years ended December 31, 2024 and 2023 (in millions, except for average selling prices and other information):

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2024","","December 31, 2023","","Change","","% Change"],["North America"],["Home sales","$","181.1","","","$","233.8","","","$","(52.7)","","","(22.5)","%"],["Home cost and selling expenses","145.7","","","179.8","","","(34.1)","","","(19.0)","%"],["NOI","$","35.4","","","$","54.0","","","$","(18.6)","","","(34.4)","%"],["NOI margin %","19.5","%","","23.1","%","","(3.6)","%"],["UK"],["Home sales","$","188.8","","","$","186.1","","$","2.7","","","1.5","%"],["Home cost and selling expenses","127.4","","","125.8","","1.6","","","1.3","%"],["NOI","$","61.4","","","$","60.3","","$","1.1","","","1.8","%"],["NOI margin %","32.5","%","","32.4","%","","0.1","%"],["Total"],["Home sales","$","369.9","","","$","419.9","","","$","(50.0)","","","(11.9)","%"],["Home cost and selling expenses","273.1","","","305.6","","","(32.5)","","","(10.6)","%"],["NOI","$","96.8","","","$","114.3","","","$","(17.5)","","","(15.3)","%"],["NOI margin %","26.2","%","","27.2","%","","(1.1)","%"],["Units Sold:"],["North America","2,001","","","2,565","","(564)","","","(22.0)","%"],["UK","2,948","","","2,857","","91","","","3.2","%"],["Total home sales","4,949","","","5,422","","(473)","","","(8.7)","%"],["Average Selling Price:"],["North America","$","90,505","","","$","91,150","","$","(645)","","","(0.7)","%"],["UK","$","64,043","","","$","65,138","","$","(1,095)","","","(1.7)","%"]]
[[/GREPCENT_TABLE]]

NOI - North America

For the year ended December 31, 2024, the 34.4% decrease in NOI is primarily driven by a 22.0% decrease in total home sales volume as compared to the same period in 2023, primarily driven by the impact of Hurricanes Helene and Milton on volumes in the southeast region of the U.S., and fewer available sites to sell homes on in conjunction with reduced expansion and development activity, as well as a 360 basis point decrease in margins, driven by the decrease in home sales volumes causing home sales revenue to decline at a faster rate than home cost and selling expenses.

NOI - UK

For the year ended December 31, 2024, the 1.8% increase in NOI is primarily driven by a 3.2% increase in total home sales volume, partially offset by a 1.7% reduction in average selling price, as compared to the same period in 2023.

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SUN COMMUNITIES, INC.

Other Items - Statements of Operations(1)

The following table summarizes other income and expenses for the years ended December 31, 2024 and 2023 (amounts in millions):

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2024","","December 31, 2023","","Change","","% Change"],["Service, retail, dining and entertainment, net","$","56.2","","","$","68.5","","","$","(12.3)","","","(18.0)","%"],["Interest income","$","20.7","","","$","45.4","","","$","(24.7)","","","(54.4)","%"],["Brokerage commissions and other, net","$","40.2","","","$","60.6","","","$","(20.4)","","","(33.7)","%"],["General and administrative expense","$","295.3","","","$","272.1","","","$","23.2","","","8.5","%"],["Catastrophic event-related charges, net","$","27.1","","","$","3.8","","","$","23.3","","","N/M"],["Business combinations","$","0.4","","","$","3.0","","","$","(2.6)","","","(86.7)","%"],["Depreciation and amortization","$","680.7","","","$","660.0","","","$","20.7","","","3.1","%"],["Asset impairments","$","71.4","","","$","10.1","","","$","61.3","","","N/M"],["Goodwill impairment","$","180.8","","","$","369.9","","","$","(189.1)","","","(51.1)","%"],["Loss on extinguishment of debt","$","1.4","","","$","\u2014","","","$","1.4","","","N/A"],["Interest expense","$","350.4","","","$","325.8","","","$","24.6","","","7.6","%"],["Interest on mandatorily redeemable preferred OP units / equity","$","\u2014","","","$","3.3","","","$","(3.3)","","","(100.0)","%"],["Loss on remeasurement of marketable securities","$","\u2014","","","$","(16.0)","","","$","16.0","","","(100.0)","%"],["Loss on foreign currency exchanges","$","(25.8)","","","$","(0.3)","","","$","(25.5)","","","N/M"],["Gain on dispositions of properties","$","202.9","","","$","11.0","","","$","191.9","","","N/M"],["Other income / (expense), net","$","3.2","","","$","(7.5)","","","$","10.7","","","N/M"],["Loss on remeasurement of notes receivable","$","(36.4)","","","$","(106.7)","","","$","70.3","","","(65.9)","%"],["Income from nonconsolidated affiliates","$","9.5","","","$","16.0","","","$","(6.5)","","","(40.6)","%"],["Gain / (loss) on remeasurement of investment in nonconsolidated affiliates","$","6.6","","","$","(4.2)","","","$","10.8","","","N/M"],["Current tax expense","$","(4.3)","","","$","(14.5)","","","$","10.2","","","(70.3)","%"],["Deferred tax benefit","$","39.6","","","$","22.9","","","$","16.7","","","72.9","%"],["Preferred return to preferred OP units / equity interests","$","12.8","","","$","12.3","","","$","0.5","","","4.1","%"],["Income / (loss) attributable to noncontrolling interests","$","5.3","","","$","(8.1)","","","$","13.4","","","N/M"]]
[[/GREPCENT_TABLE]]

(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. N/A = Not applicable.

Service, retail, dining and entertainment, net - for the year ended December 31, 2024, decreased primarily due to lower transient demand in the RV and Marina segments leading to a reduction in revenue generation from service, retail, dining and entertainment activities, as well as increased costs related to service and retail activities in our Marina segment.

Interest income - for the year ended December 31, 2024, decreased primarily due to having a lower receivable balance outstanding with real estate operators than during the same period in 2023. Refer to Note 4, "Notes and Other Receivables," in our accompanying Consolidated Financial Statements for additional information.

Brokerage commissions and other, net - for the year ended December 31, 2024, decreased primarily due to a decrease in business interruption recoveries recognized in 2024 as compared to the same period in 2023, a decrease in the number of brokered home sales reducing total brokerage commissions as compared to the same period in 2023, and a decrease in dividend income as a result of the sale of our publicly traded marketable securities in Ingenia Communities Group ("Ingenia") in 2023. Refer to Note 16, "Commitments and Contingencies," in our accompanying Consolidated Financial Statements for additional information.

Catastrophic event-related charges, net - for the year ended December 31, 2024, increased, primarily due to charges of $18.3 million for debris removal and clean-up and impaired assets at several of our MH, RV, and marina properties due to Hurricanes Helene and Milton, and incremental asset impairment and debris removal charges, net of insurance recoveries, of $5.6 million driven by flooding at an RV community in New Hampshire.

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Asset impairments - for the year ended December 31, 2024, increased due to impairment charges of $24.1 million related to non-continuing expansion and development properties within our MH and RV segments, and impairment charges of $21.1 million related to a portfolio of four RV communities and two development properties that were classified as held for sale and subsequently sold. Refer to Note 3, "Real Estate Acquisitions and Dispositions," and Note 15, "Fair Value Measurements," in our accompanying Consolidated Financial Statements for additional information.

Goodwill impairment - for the year ended December 31, 2024, was a charge of $180.8 million, as compared to a charge of $369.9 million during the same period in 2023, due to goodwill impairment charges in each respective year, driven by declines in the fair value of our Park Holidays reporting unit within the UK reporting segment. Refer to Note 6, "Goodwill and Other Intangible Assets," in our accompanying Consolidated Financial Statements for additional information.

Loss on remeasurement of marketable securities - for the year ended December 31, 2024, was zero, as compared to a loss of $16.0 million during the same period in 2023, due to the sale of our publicly traded marketable securities in Ingenia in 2023.

Loss on foreign currency exchanges - for the year ended December 31, 2024, was a loss of $25.8 million, as compared to a loss of $0.3 million during the same period in 2023 due to the strengthening of the U.S. dollar as compared to the pound sterling and Canadian dollar as compared to the same period in 2023.

Gain on dispositions of properties - for the year ended December 31, 2024, increased due to a gain of $202.9 million from the sale of 25 properties in 2024. Refer to Note 3, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated Financial Statements for additional information.

Other income / (expense), net - for the year ended December 31, 2024, was income of $3.2 million, as compared to an expense of $7.5 million during the same period in 2023, primarily due to a litigation settlement gain of $10.3 million related to our Marina segment in 2024, as compared to higher long-term lease termination expenses during the same period in 2023.

Loss on remeasurement of notes receivable - for the year ended December 31, 2024, was a loss of $36.4 million, as compared to a loss of $106.7 million during the same period in 2023, primarily due to a fair value adjustment loss of $35.2 million in 2024 related to the sale of a portfolio of RV communities, as compared to an impairment charge of $102.9 million in 2023 related to our note receivable from the Royale Holdings Group HoldCo Limited. Refer to Note 4, "Notes and Other Receivables," in our accompanying Consolidated Financial Statements for additional information.

Gain / (loss) on remeasurement of investment in nonconsolidated affiliates - for the year ended December 31, 2024, was a gain of $6.6 million as compared to a loss of $4.2 million during the same period in 2023 due to the fluctuation in the fair value of a notes receivable portfolio held at our GTSC joint venture. Refer to Note 7, "Investments in Nonconsolidated Affiliates," in our accompanying Consolidated Financial Statements for additional information.

Current tax expense - for the year ended December 31, 2024, was an expense of $4.3 million, compared to an expense of $14.5 million, during the same periods in 2023, primarily due to tax planning efforts at our UK operations in 2024 and taxes accrued in the UK in 2023 driven by property dispositions.

Deferred tax benefit - for the year ended December 31, 2024, increased primarily due to timing differences for book and tax purposes at our UK and Canadian operations related to deferred interest deductions and return to provision adjustments. Refer to Note 12, "Income Taxes," in our accompanying Consolidated Financial Statements for additional information.

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SUN COMMUNITIES, INC.

RECONCILIATION OF NET INCOME / (LOSS) ATTRIBUTABLE TO SUI COMMON SHAREHOLDERS TO FFO

The following table reconciles Net income / (loss) attributable to SUI common shareholders to FFO for the years ended December 31, 2024, 2023, and 2022 (in millions, except for per share amounts):

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2024","","December 31, 2023","","December 31, 2022"],["Net Income / (Loss) Attributable to SUI Common Shareholders","$","89.0","","","$","(213.3)","","","$","242.0"],["Adjustments"],["Depreciation and amortization","677.5","","","657.2","","","599.6"],["Depreciation on nonconsolidated affiliates","0.5","","","0.2","","","0.1"],["Asset impairments","71.4","","","10.1","","","3.0"],["Goodwill impairment","180.8","","","369.9","","","\u2014"],["Loss on remeasurement of marketable securities","\u2014","","","16.0","","","53.4"],["(Gain) / loss on remeasurement of investment in nonconsolidated affiliates","(6.6)","","","4.2","","","2.7"],["Loss on remeasurement of notes receivable","36.4","","","106.7","","","0.8"],["Loss on remeasurement of collateralized receivables and secured borrowings","\u2014","","","0.4","","","\u2014"],["Gain on dispositions of properties, including tax effect","(203.6)","","","(8.9)","","","(12.2)"],["Add: Returns on preferred OP units","8.3","","","11.8","","","9.5"],["Add: Income / (loss) attributable to noncontrolling interests","4.8","","","(8.1)","","","10.4"],["Gain on disposition of assets, net","(27.1)","","","(38.0)","","","(54.9)"],["FFO Attributable to SUI Common Shareholders and Dilutive Convertible Securities(1)","$","831.4","","","$","908.2","","","$","854.4"],["Adjustments"],["Business combination expense","0.4","","","3.0","","","24.7"],["Acquisition and other transaction costs(2)","19.6","","","25.3","","","22.7"],["Loss on extinguishment of debt","1.4","","","\u2014","","","4.4"],["Catastrophic event-related charges, net","27.1","","","3.8","","","17.5"],["Loss of earnings - catastrophic event-related charges, net(3)","3.4","","","2.1","","","4.8"],["(Gain) / loss on foreign currency exchanges","25.8","","","0.3","","","(5.4)"],["Other adjustments, net(4)","(27.2)","","","(27.4)","","","0.4"],["Core FFO Attributable to SUI Common Shareholders and Dilutive Convertible Securities(1)","$","881.9","","","$","915.3","","","$","923.5"],["Weighted Average Common Shares Outstanding - Diluted","129.5","","","128.9","","","125.6"],["FFO Attributable to SUI Common Shareholders and Dilutive Convertible Securities Per Share","$","6.42","","","$","7.05","","","$","6.80"],["Core FFO Attributable to SUI Common Shareholders and Dilutive Convertible Securities Per Share","$","6.81","","","$","7.10","","","$","7.35"]]
[[/GREPCENT_TABLE]]

(1)Excludes the effect of certain anti-dilutive convertible securities.

(2)These costs represent (i) nonrecurring integration expenses associated with acquisitions during the years ended December 31, 2024, and 2023, (ii) costs associated with potential acquisitions that will not close, (iii) 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, and (iv) other non-recurring transaction costs.

(3)Loss of earnings - catastrophic event-related charges, net for the year ended December 31, 2024 and 2023 included the following:

[[GREPCENT_TABLE]]
[["","","","Year Ended"],["","","","","","December 31, 2024","","December 31, 2023"],["Hurricane Ian - three Fort Myers, Florida RV communities"],["Estimated loss of earnings in excess of the applicable business interruption deductible","","","","","$","19.2","","","$","21.9"],["Insurance recoveries realized for previously estimated loss of earnings","","","","","(16.3)","","","(19.7)"],["Other catastrophic weather events - four Florida communities and one New Hampshire community"],["Estimated loss of earnings in excess of the applicable business interruption deductible, net","","","","","1.8","","","(0.1)"],["Insurance recoveries realized for previously estimated loss of earnings","","","","","(1.3)","","","\u2014"],["Loss of earnings - catastrophic event-related charges, net","","","","","$","3.4","","","$","2.1"]]
[[/GREPCENT_TABLE]]

(4)Other adjustments, net relates primarily to (i) deferred tax benefit, litigation activity, long term lease termination expense and accelerated deferred compensation amortization during the years ended December 31, 2024, 2023, and 2022, (ii) ERP implementation costs during the years ended December 31, 2024 and 2023, (iii) gain on sale of investment in nonconsolidated affiliates during the years ended December 31, 2023 and 2022, (iv) insurance loss recovery expense and severance costs during the year ended December 31, 2024, and (v) RV rebranding non-recurring costs during the year ended December 31, 2022.

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LIQUIDITY AND CAPITAL RESOURCES

Short-term Liquidity

Our principal short-term liquidity demands historically have been, and are expected to continue to be, distributions to our shareholders and the unit holders of the Operating Partnership, property acquisitions, development and expansion of our properties, capital improvement of our 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 flow generated from operations, draws on our senior credit facility, and the use of debt and equity offerings under our shelf registration statement. Refer to Note 8, "Debt and Line of Credit," Note 9, "Equity and Temporary Equity" and Note 20, "Subsequent Events," in our accompanying Consolidated Financial Statements for additional information and related activity subsequent to December 31, 2024.

We 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. Our investment grade credit ratings remain unchanged from the initial rating. We plan to continue to capitalize on our unsecured bond market access to optimize our cost of capital and increase our financial flexibility.

Current market and economic conditions, including relating to, among other things, interest rates, currency fluctuations, equity valuations and inflation, may adversely affect our ability to obtain debt and equity capital in the short term on attractive terms.

Since our initial public offering in 1993, we have demonstrated operational reliability and cash flow strength throughout economic cycles. Our current objectives include streamlining our operations with an emphasis on our reliable real property income. We recognize the headwinds we are facing from a challenging macroeconomic environment and are re-aligning our strategy to focus on our proven, durable income streams. We are positioned for ongoing organic growth with expected rental rate increases, occupancy gains and expense management. In 2025, we expect rental rate growth that exceeds headline inflation with ongoing focus on expense management to continue generating strong organic cash flow growth.

Given a macroeconomic backdrop of sustained higher interest rates, we intend to prioritize debt reduction as our primary use of free cash flow from our operations and of proceeds from equity issuances and selective capital recycling. In addition, we are reducing our development activity considering the more challenging macroeconomic and capital market environment. Capital spending besides projects that are underway will be solely focused on the most strategic opportunities. We also attempt to manage interest rate risks by using interest rate hedging instruments and by monitoring our overall leverage levels. We engage in certain hedging transactions to limit our exposure from the adverse effects of changes in interest rates on borrowing costs of our loans.

Acquisitions, Dispositions, Development and Expansion Activities

Subject to market conditions, we intend to selectively identify opportunities to expand our development pipeline and acquire existing properties. We finance acquisitions through available cash, secured financing, draws on our senior credit facility, the assumption of existing debt on properties and the issuance of debt and equity securities. Given the higher interest rate environment, we continue to selectively pursue acquisition and development opportunities that meet our underwriting criteria.

During the year ended December 31, 2024, we acquired three marinas and three marina expansion assets with an aggregate of 925 wet slips and dry storage spaces for an aggregate purchase price of approximately $63.8 million. In conjunction with two of the marina acquisitions, we issued an aggregate of 262,599 common OP units as part of the consideration transferred. During the same period, we entered into a ground lease that can support one marina with eight wet slips and dry storage spaces.

We have commenced a targeted disposition program to divest non-strategic assets in an effort to simplify management and reduce total debt. During and subsequent to the year ended December 31, 2024, we sold 10 MH properties, 17 RV properties, two UK properties, and three MH development properties with an aggregate of 7,341 sites for a gross sale price of approximately $569.7 million, and received total cash consideration of approximately $419.3 million, net of settlement of the associated mortgage debt of $93.5 million. The net proceeds were used to repay borrowings outstanding under the senior credit facility.

During the year ended December 31, 2024, we acquired two land parcels located in the U.S. for an aggregate purchase price of $12.9 million. The parcels can accommodate the potential development of over 1,100 sites. We also acquired two land parcels located in the U.K. for an aggregate purchase price of $11.6 million. We also expanded two of our existing communities by over 70 sites and delivered nearly 100 sites at two ground-up development properties.

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We plan to selectively expand our properties utilizing our inventory of owned and entitled land. We have 16,570 MH and RV sites suitable for future development.

Refer to Note 3, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated Financial Statements for additional details on acquisitions and dispositions completed to date.

Capital Expenditures (excluding Acquisition Costs)

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

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2024","","December 31, 2023"],["Recurring Capital Expenditures","$","115.7","","","$","87.3"],["Non-Recurring Capital Expenditures and Related Activities"],["Lot modifications","37.2","","","54.9"],["Growth projects","96.9","","","104.5"],["Rebranding","3.1","","","4.7"],["Capital improvements to recent acquisitions","80.4","","","215.3"],["Expansion and development","136.1","","","276.3"],["Rental program","177.5","","","260.9"],["Other","6.0","","","(0.9)"],["Total Non-Recurring Capital Expenditure and Related Activities","537.2","","","915.7"],["Total Capital Expenditure and Related Activities","$","652.9","","","$","1,003.0"]]
[[/GREPCENT_TABLE]]

Recurring Capital Expenditures

Property recurring capital expenditures are necessary to maintain asset quality, including purchasing and replacing items used to operate the communities and marinas. Recurring capital expenditures at our MH, RV, and UK properties include major road, driveway and pool improvements; clubhouse renovations; adding or replacing streetlights; playground equipment; signage; maintenance facilities; manager housing; and property vehicles. Recurring capital expenditures at our marinas include dredging, dock repairs and improvements, and equipment maintenance and upgrades. The minimum capitalized amount is five hundred dollars.

Non-Recurring Capital Expenditures and Related Activities

Lot modifications - consist of expenditures 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 the properties. These include, but are 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.

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

Capital improvements to recent acquisitions - often require 24 to 36 months to complete after closing and include upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovations including larger decks, heaters and furniture; new maintenance facilities; lot modifications; and new signage including main signs and internal road signs.

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

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Rental program - consists of investment in the acquisition of homes intended for the rental program and the purchase of vacation rental homes at our RV communities. Expenditures for these investments depend upon the condition of the markets for repossessions and new home sales, rental homes, and vacation rental homes.

Cash Flow Activities

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

[[GREPCENT_TABLE]]
[["","Year Ended"],["","December 31, 2024","","December 31, 2023","","December 31, 2022"],["Net Cash Provided By Operating Activities","$","861.0","","","$","790.5","","","$","734.9"],["Net Cash Used For Investing Activities","$","(267.4)","","","$","(919.5)","","","$","(3,062.6)"],["Net Cash Provided By / (Used For) Financing Activities","$","(571.6)","","","$","80.3","","","$","2,348.6"],["Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash","$","(0.8)","","","$","1.0","","","$","(8.7)"]]
[[/GREPCENT_TABLE]]

Cash, cash equivalents and restricted cash increased by $21.2 million from $42.7 million as of December 31, 2023, to $63.9 million as of December 31, 2024.

Operating activities - Net cash provided by operating activities increased by $70.5 million to $861.0 million for the year ended December 31, 2024, compared to $790.5 million for the year ended December 31, 2023. The increase in operating cash flow was primarily due to beneficial changes in inventory, other assets, and other liabilities, and improved Same Property operating performance at our MH properties, marinas, and UK properties, partially offset by reduced operating performance at our RV properties during the year ended December 31, 2024 as compared to the corresponding period in 2023.

Our net cash flows provided by operating activities from continuing operations may be adversely impacted by, among other things:

•the market and economic conditions in our current markets generally, and specifically in the metropolitan areas of our current markets;

•lower occupancy and rental rates of our properties;

•increases in other operating costs, such as wage and benefit costs, supplies and repairs, real estate taxes and utilities;

•substantial increases in insurance premiums;

•decreased sales of manufactured homes;

•current volatility in economic conditions and the financial markets; and

•the effects of outbreaks of disease and related restrictions on business operations.

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

Investing activities - Net cash used for investing activities decreased by $652.1 million to $267.4 million for the year ended December 31, 2024, compared to $919.5 million for the year ended December 31, 2023. The decrease in Net cash used for investing activities was primarily driven by a decrease in cash deployed to invest in existing properties and proceeds received from the disposition of 10 MH properties, 13 RV properties, two UK properties, and three MH development properties during the year ended December 31, 2024 as compared to the corresponding period in 2023. Refer to the Consolidated Statements of Cash Flows for detail on the net cash used for investing activities during the years ended December 31, 2024 and 2023. Refer to Note 3, "Real Estate Acquisitions and Dispositions" and Note 20, "Subsequent Events," in our accompanying Consolidated Financial Statements for additional information on acquisitions and investment activity subsequent to December 31, 2024.

Financing activities - Net cash used for financing activities was $571.6 million for the year ended December 31, 2024, compared to net cash provided by financing activities of $80.3 million for the year ended December 31, 2023. The change in Net cash provided by / (used for) financing activities was primarily driven by cash disbursed to settle mortgage debt and repay borrowings outstanding under the senior credit facility, partially offset by proceeds from the issuance of equity during the year ended December 31, 2024, as compared to the net issuance of debt during the corresponding period in 2023, as part of our strategy to optimize the strength of our balance sheet. Refer to the Consolidated Statements of Cash Flows for detail on the net cash provided by / (used for) financing activities during the years ended December 31, 2024 and 2023. Refer to Note 8, "Debt and Line of Credit" in our accompanying Consolidated Financial Statements for additional information.

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SUN COMMUNITIES, INC.

We are exposed to interest rate variability associated with our outstanding floating rate debt and any maturing debt that has to be refinanced. Interest rate movements impact our borrowing costs and, while as of December 31, 2024, approximately 91% of our total debt was fixed rate financing, including the impact of hedge activity, increases in interest costs are likely to adversely affect our financial results.

Equity and Debt Activity

At the Market Offering Sales Agreement

During May 2024, we renewed our 2021 At the Market Offering Sales Agreement ("ATM") 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. During the three months ended September 30, 2024, we entered into forward sale agreements with respect to 2,713,571 shares of common stock under the ATM. We completed the physical settlement of these shares for an aggregate gross sales price of $364.3 million and received net proceeds of $361.7 million, or $133.31 per share. The net proceeds were used to repay borrowings outstanding under the senior credit facility. Through December 31, 2024, we had entered into and settled forward sales agreements under the ATM for an aggregate gross sales price of $524.8 million, leaving $725.2 million available for sale under the ATM.

Senior Unsecured Notes

The following table sets forth certain information regarding our outstanding senior unsecured notes (in millions, except for statistical information). All senior unsecured notes include interest payments on a semi-annual basis in arrears.

[[GREPCENT_TABLE]]
[["","","","","Carrying Amount"],["","","Principal Amount","","December 31, 2024","","December 31, 2023"],["5.5% notes, issued in January 2024 and due in January 2029(1)","","$","500.0","","","$","496.2","","","$","\u2014"],["5.7% notes, issued in January 2023 and due in January 2033","","400.0","","","396.1","","","395.7"],["4.2% notes, issued in April 2022 and due in April 2032","","600.0","","","593.2","","","592.6"],["2.3% notes, issued in October 2021 and due in November 2028","","450.0","","","447.4","","","446.8"],["2.7% notes, issued in June 2021 and October 2021, and due in July 2031","","750.0","","","743.4","","","742.4"],["Total","","$","2,700.0","","","$","2,676.3","","","$","2,177.5"]]
[[/GREPCENT_TABLE]]

(1) In January 2024, the Operating Partnership issued $500.0 million of senior unsecured notes with an interest rate of 5.5% and a five-year term, due January 15, 2029 (the "2029 Notes"). Interest on the 2029 Notes is payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2024. The net proceeds from the offering were $495.4 million, after deducting underwriters' discounts and offering expenses. We used the majority of the net proceeds to repay borrowings outstanding under our senior credit facility.

The obligations of the Operating Partnership to pay principal, premiums, if any, and interest on our senior unsecured 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 its parent company 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

The Operating Partnership (as borrower), SUI (as guarantor), and certain lenders are parties to a credit agreement which governs our senior credit facility.

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SUN COMMUNITIES, INC.

Prior to March 2024, the aggregate amount of our senior credit facility was $4.2 billion with the ability to upsize the total borrowings by an additional $800.0 million, subject to certain conditions. The aggregate amount under the senior credit facility consisted of the following: (a) a revolving loan in an amount up to $3.05 billion and (b) a term loan facility of $1.15 billion, with the ability to draw funds from the combined facilities in U.S. dollars, pound sterling, euros, Canadian dollars and Australian dollars, subject to certain limitations. The maturity date of the revolving loan facility is April 7, 2026. At our option that maturity date may be extended two additional six-month periods.

In March 2024, we terminated the term loan facility and settled the associated $1.1 billion of borrowings outstanding under the term loan by increasing our borrowings under the revolving loan of the senior credit facility. By terminating the term loan, we reduced our aggregate borrowing capacity under the senior credit facility to $3.05 billion under the revolving loan. During the three months ended March 31, 2024, we recognized a Loss on extinguishment of debt in our Consolidated Statements of Operations of $0.6 million related to the termination of the term loan facility. In June 2024, we amended the senior credit facility to replace the Canadian Dollar Offered Rate with the Canadian Overnight Repo Rate Average ("CORRA") as the benchmark rate for borrowings denominated in Canadian dollars, with no other significant changes to the terms of the senior credit facility.

The senior credit facility bears interest at a floating rate based on the Adjusted Term Secured Overnight Financing Rate ("SOFR"), the Adjusted Eurocurrency Rate, the Australian Bank Bill Swap Bid Rate ("BBSY"), the Daily Sterling Overnight Index Average ("SONIA") Rate or the CORRA, as applicable, plus a margin, in all cases, which can range from 0.725% to 1.6%, subject to certain adjustments. As of December 31, 2024, the margins based on our credit ratings were 0.85% on the revolving loan facility.

At the lenders' option, the senior credit facility will become immediately due and payable upon an event of default under the Credit Facility Agreement. We had $1.4 billion and $944.1 million of borrowings outstanding under the revolving loan as of December 31, 2024 and 2023, respectively. The balance is recorded in Unsecured debt 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. We had $11.5 million and $26.2 million outstanding letters of credit at December 31, 2024 and 2023, respectively.

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:

[[GREPCENT_TABLE]]
[["Covenant","","Requirement","","As of December 31, 2024"],["Maximum leverage ratio","","65.0%","","32.0%"],["Minimum fixed charge coverage ratio","","1.40","","2.86"],["Maximum secured leverage ratio","","40.0%","","11.9%"]]
[[/GREPCENT_TABLE]]

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

[[GREPCENT_TABLE]]
[["Covenant","","Requirement","","As of December 31, 2024"],["Total debt to total assets","","\u226460.0%","","38.8%"],["Secured debt to total assets","","\u226440.0%","","17.2%"],["Consolidated income available for debt service to debt service","","\u22651.50","","4.28"],["Unencumbered total asset value to total unsecured debt","","\u2265150.0%","","366.3%"]]
[[/GREPCENT_TABLE]]

As of December 31, 2024, 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.

Derivative Transactions

We enter into treasury rate lock contracts, interest rate swaps, and forward swaps for interest rate risk management purposes. We do not enter into derivative instruments for speculative purposes. The risks being hedged are the interest rate risk related to outstanding floating rate debt and forecasted debt issuance transactions, and the benchmark interest rates used are the SOFR and the SONIA Rate.

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SUN COMMUNITIES, INC.

During the year ended December 31, 2024, we entered into five interest rate swap contracts with an aggregate notional value of $150.0 million to hedge interest rate risk associated with a future debt offering.

During the year December 31, 2024, in connection with the issuance of the 2029 Notes, we settled seven forward swap contracts totaling $255.0 million and paid a net settlement payment of $2.3 million to several counterparties. Refer to Note 14, "Derivative Financial Instruments," in our accompanying Consolidated Financial Statements for additional information.

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 long-term unsecured and secured debt and the issuance of certain debt or equity securities subject to market conditions. If current market and economic conditions, including relating to, among other things, interest rates, currency fluctuations, equity valuations, and inflation, continue or worsen, our ability to obtain debt and equity capital in the long term on attractive terms may be adversely affected.

As of December 31, 2024, we had unrestricted cash on hand of $47.4 million, $1.6 billion of remaining capacity on the senior credit facility, and a total of 508 unencumbered MH, RV, marina, and UK 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 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 debt 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, 2024, our net debt to enterprise value was 30.9% (assuming conversion of all common and preferred OP units to shares of common stock). Our debt has a weighted average interest rate of 4.09% and a weighted average years to maturity of 6.2.

Capital Requirements

Our capital requirements as of December 31, 2024 include both short and long term obligations:

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

[[GREPCENT_TABLE]]
[["","","Payments Due By Period (in millions)"],["Outstanding Debt(1)","","Total Due","","Short-term Obligation \u22641 Year","","Long-term Obligation After 1 Year","","Refer to"],["Principal payments on long-term debt","","$","7,387.8","","","$","103.0","","","$","7,284.8","","","Note 8. Debt and Line of Credit"],["Interest expense(2)","","1,574.0","","","245.6","","","1,328.4"],["Operating leases","","321.0","","","14.1","","","306.9","","","Note 17. Leases"],["Finance lease","","44.7","","","5.1","","","39.6","","","Note 17. Leases"],["Total Outstanding Debt","","$","9,327.5","","","$","367.8","","","$","8,959.7"]]
[[/GREPCENT_TABLE]]

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

(2)Our obligations related to interest expense are calculated based on the current debt levels, rates and maturities as of December 31, 2024 (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.

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Certain of our nonconsolidated affiliates, which are accounted for under the equity-method of accounting, have incurred debt. 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 7, "Investments in Nonconsolidated Affiliates," in the accompanying Consolidated Financial Statements for additional information about these entities.

GTSC - GTSC maintains a warehouse line of credit with a maximum borrowing capacity of $325.0 million, with an option to increase to $375.0 million subject to the lender's consent. During the three months ended September 30, 2024, at GTSC's election, the maximum borrowing capacity on the line of credit was reduced to $275.0 million. As of December 31, 2024 and 2023, the aggregate carrying amount of debt, including both our and our partner's share, incurred by GTSC was $242.9 million (of which our proportionate share is $97.1 million), and $261.3 million (of which our proportionate share is $104.5 million), respectively. The debt bears interest at a variable rate based on a Commercial Paper or adjusted SOFR plus a margin ranging from 1.65% to 2.5% per annum and matures on December 15, 2026.

Sungenia JV - Sungenia maintains a debt facility agreement with a maximum borrowing capacity of $54.1 million Australian dollars, or $33.6 million converted at the December 31, 2024 exchange rate. As of December 31, 2024 and 2023, the aggregate carrying amount of the debt, including both our and our partners' share, incurred by Sungenia JV was $25.0 million (of which our proportionate share is approximately $12.5 million), and $25.2 million (of which our proportionate share is $12.6 million), respectively. The debt bears interest at a variable rate based on the Australian BBSY rate plus a margin ranging from 0.95% to 1.4%, subject to adjustment for additional future commitments, per annum and matures on June 30, 2027.

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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, 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, impairments of long-lived assets, and impairments of 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 certain situations, we discuss the likelihood that materially different amounts could be reported under varied conditions and assumptions.

Goodwill Impairment

In performing goodwill impairment testing, we utilize a third-party valuation specialist to assist management in determining the fair value of our reporting units. The fair value of each reporting unit is estimated based on a combination of discounted cash flows (income approach) and the use of pricing multiples derived from an analysis of comparable public companies multiplied against historical and / or anticipated financial metrics (market approach) for each reporting unit. These calculations contain uncertainties as they require management to make assumptions including, but not limited to, market comparables, future cash flows of the reporting units, and appropriate weighted average cost of capital and long-term growth rates. A decline in the actual cash flows of our reporting units in future periods, as compared to the projected cash flows used in our valuations, could result in the carrying value of the reporting units exceeding their respective fair values. Further, a change in market comparables, discount rate or long-term growth rates, as a result of a change in economic conditions or otherwise, could result in the carrying values of the reporting units exceeding their respective fair values. Refer to Note 6, "Goodwill and Other Intangible Assets," in our accompanying Consolidated Financial Statements for additional information regarding goodwill.

In 2024 and 2023, we performed qualitative and quantitative assessments of our goodwill balance for potential impairment in accordance with ASC 350-20, "Intangibles - Goodwill and Other." As a result of our impairment testing, we determined that the fair value of the Park Holidays reporting unit within the UK reporting segment was below its carrying value in each such year and recorded non-cash goodwill impairment charges of $180.8 million and $369.9 million during the years ended December 31, 2024 and 2023, respectively. The declines in the fair value of the Park Holidays reporting unit were primarily driven by uncertainty in the macroeconomic environment in the region, which began in 2023 and was exacerbated by political changes during the fourth quarter of 2024, leading to a higher weighted average cost of capital, inflationary pressures and changing competitive market dynamics. The uncertainty in the macroeconomic and competitive landscape has caused a decline in projected future cash flows for our Park Holidays business that operates in the region. As a result of the recognized goodwill impairment charges, our goodwill balance at the UK reporting segment is now zero as of December 31, 2024.

Our other reporting units are less sensitive to changes in macroeconomic factors and forecast assumptions than our UK reporting unit due to greater excess of fair value over carrying value. For the Marina reporting unit, we concluded that the fair value exceeded its carrying value by over 7% as part of our annual testing during the fourth quarter of 2024. We did not identify a triggering event in any other reporting unit.

Impact of New Accounting Standards

Refer to Note 19, "Recent Accounting Pronouncements," in our accompanying Consolidated Financial Statements for information regarding new accounting pronouncements.

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SUN COMMUNITIES, INC.