Real Estate Acquisitions

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

Real Estate Acquisitions

Real Estate Acquisitions and Dispositions

Green Courte Real Estate Partners, LLC

In July 2014, we entered into agreements to acquire a portfolio of manufactured home communities from Green Courte Real Estate Partners, LLC sponsored funds (the "Green Courte Entities"). The portfolio consists of 59 manufactured home communities comprising over 19,000 sites in eleven states, including nearly 11,000 sites located in Florida. Approximately 14,000 sites, or 71%, of the portfolio is included in age-restricted communities. In connection with this transaction, the Company will assume the Green Courte Entities' right to acquire an additional manufactured home community pursuant to a binding purchase agreement.

Total consideration for the acquisition is approximately $1.32 billion, including the assumption of approximately $560 million of debt. We will pay approximately $311 million in cash (increased by the reduction in assumed mortgage debt prior to closing), issue approximately $262 million of common stock and common OP units, and issue $175 million of newly-created Series A-4 Convertible Perpetual Preferred Stock or Convertible Perpetual Preferred Operating Limited Partnership units to the Green Courte Entities. Additionally, an affiliate of the Green Courte Entities has committed to make an investment of not less than approximately $13 million in the Company’s equity.

Subject to certain conditions, we anticipate that the acquisition will occur in two separate closings. The closing with respect to 34 communities is anticipated to occur 10 business days after the loan assumption approval is obtained for a sufficient number of communities as set forth in the acquisition agreements, but not later than December 31, 2014 (or such earlier date as we determine upon notice to the Green Courte Entities). The closing with respect to the remaining 25 communities is anticipated to occur on January 6, 2015. The consummation of the acquisition is subject to certain confirmatory diligence and customary closing conditions, including obtaining certain third party consents. As a result, there can be no assurances as to the actual closings or the timing of either of the closings.

Pursuant to the acquisition agreements, we made an earnest money deposit in the aggregate amount of $50 million (“Earnest Money Deposit”). The Earnest Money Deposit may be forfeited if we fail to close on the transactions contemplated by any definitive agreement in breach of the terms thereof and such breach continues for a period of 10 days without cure. The Earnest Money Deposit is the sole remedy for any such breach and shall serve as liquidated damages, except that if such a default occurs after the first closing, we shall also pay the Green Courte Entities the sum of $25 million as additional liquidated damages.

Acquisitions

In June 2014, we acquired Lake Rudolph Campground and Recreational Vehicle Resort ("Lake Rudolph"), a recreational vehicle ("RV") community with 503 sites located in Santa Claus, Indiana.

In April 2014, we acquired Saco/Old Orchard Beach RV Resort ("Saco"), a community with 127 sites located in Saco, Maine.

In February 2014, we acquired Driftwood Camping Resort ("Driftwood"), an RV community with 698 sites and expansion potential of approximately 30 sites located in Clermont, New Jersey, and Seashore Campsites RV and Campground ("Seashore"), an RV community with 685 sites located in Cape May, New Jersey.

In January 2014, we acquired Castaways RV Resort & Campground ("Castaways"), an RV community with 369 sites and expansion potential of approximately 25 sites located in Worcester County, Maryland, and Wine Country RV Resort ("Wine Country"), an RV community with 166 sites and expansion potential of approximately 34 sites located in Paso Robles, California.

2.      Real Estate Acquisitions and Dispositions, continued

The following tables summarize the amounts of the assets acquired and liabilities assumed at the acquisition dates and the consideration paid for acquisitions completed in 2014 (in thousands):

At Acquisition Date	Wine Country			Castaways			Seashore			Driftwood			Saco			Lake Rudolph			Total
Investment in property	$	13,250		$	36,597		$	24,258		$	31,301		$	4,366		$	30,454		$	140,226
In-place leases and other intangible assets	—			—			500			790			—			—			1,290
Other assets	9			2			12			4			31			64			122
Below market franchise intangible	—			—			—			—			(6		)	—			(6		)
Other liabilities	(60		)	(497		)	(1,188		)	(836		)	(258		)	(1,417		)	(4,256		)
Total identifiable assets and liabilities assumed	$	13,199		$	36,102		$	23,582		$	31,259		$	4,133		$	29,101		$	137,376
Consideration
Cash consideration transferred	$	13,199		$	36,102		$	23,582		$	31,259		$	4,133		$	29,101		$	137,376

The purchase price allocations for Wine Country, Castaways, Seashore, Driftwood, Saco and Lake Rudolph are preliminary and may be adjusted as final costs and final valuations are determined.

The amount of revenue and net income included in the consolidated statements of operations for the three and nine months ended September 30, 2014 for all acquisitions described above is set forth in the following table (in thousands):

	Three Months Ended September 30, 2014		Nine Months Ended September 30, 2014
	(unaudited)
Revenue	$	10,105	$	16,184
Net income	$	5,806	$	9,031

The following unaudited pro forma financial information presents the results of our operations for the three and nine months ended September 30, 2014 and 2013 as if the properties were acquired on January 1, 2013. The unaudited pro forma results reflect certain adjustments for items that are not expected to have a continuing impact, such as adjustments for transaction costs incurred, management fees and purchase accounting. The information presented below has been prepared for comparative purposes only and does not purport to be indicative of either future results of operations or the results of operations that would have actually occurred had the acquisitions been consummated on January 1, 2013 (in thousands, except per-share data).

	Three Months Ended September 30,				Nine Months Ended September 30,
	(unaudited)
	2014		2013		2014		2013
Total revenues	$	125,435	$	113,212	$	353,734	$	321,088
Net income attributable to Sun Communities, Inc. common stockholders	$	24,896	$	4,523	$	39,675	$	12,978
Net income per share attributable to Sun Communities, Inc. common stockholders - basic	$	0.60	$	0.13	$	0.99	$	0.38
Net income per share attributable to Sun Communities, Inc. common stockholders - diluted	$	0.60	$	0.13	$	0.99	$	0.38

Transaction costs of approximately $2.4 million and $0.6 million and $4.3 million and $2.8 million have been incurred for the three and nine months ended September 30, 2014 and 2013, respectively, and are presented as “Transaction costs” in our consolidated statements of operations.

2.      Real Estate Acquisitions and Dispositions, continued

Dispositions

During the nine months ended September 30, 2014, we closed on the sales of 10 manufactured housing ("MH") communities: Bedford Hills, White Oak, Falcon Pointe, Timberbrook, Woodlake Estates, Byrne Hill, Continental Estates, Davison East, Countryside Village and Desert View Village. During the first quarter of 2014, the Company chose to early adopt Accounting Standards Update ("ASU") 2014-08, "Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" ("ASU 2014-08"). Pursuant to ASU 2014-08, the disposals of the communities do not qualify for presentation as discontinued operations, as the sales do not have a major impact on our operations and financial results and do not represent a strategic shift. Additionally, the communities are not considered individually significant components and therefore do not qualify for presentation as discontinued operations. A gain of $14.5 million is recorded in "Gain on disposition of properties, net" in our consolidated statement of operations.