Segment Reporting

We group our operating segments into reportable segments that provide similar products and services. Each operating segment has discrete financial information evaluated regularly by our chief operating decision maker in evaluating and assessing performance. We have two reportable segments: (i) Real Property Operations and (ii) Home Sales and Rentals. The Real Property Operations segment owns, operates, develops, or has an interest in a portfolio of MH and RV communities, and is in the business of acquiring, operating, and expanding MH and RV communities. The Home Sales and Rentals segment offers MH and RV park model sales and leasing services to tenants and prospective tenants of our communities.

Transactions between our segments are eliminated in consolidation. Transient RV revenue is included in the Real Property Operations segment revenues and is expected to approximate $77.8 million annually. This transient RV revenue was recognized 27.2 percent, 20.2 percent, and 36.9 percent in the first, second, and third quarters, respectively, and is expected to be 15.7 percent in the fourth quarter. In 2016, transient revenue was $58.2 million. We recognized 17.5 percent in the first quarter, 18.7 percent in the second quarter, 45.2 percent in the third quarter, and 18.6 percent in the fourth quarter.

A presentation of segment financial information is summarized as follows (in thousands):



	Three Months Ended September 30, 2017									Three Months Ended September 30, 2016
	Real Property Operations			Home Sales and Rentals			Consolidated			Real Property Operations			Home Sales and Rentals			Consolidated
Revenues	$	215,280		$	45,954		$	261,234		$	200,770		$	43,242		$	244,012
Operating expenses/Cost of sales	82,295			31,869			114,164			78,922			28,285			107,207
Net operating income/Gross profit	132,985			14,085			147,070			121,848			14,957			136,805
Adjustments to arrive at net income / (loss):
Interest and other revenues, net	7,011			—			7,011			5,689			—			5,689
Home selling expenses	—			(3,290		)	(3,290		)	—			(2,643		)	(2,643		)
General and administrative	(15,677		)	(2,590		)	(18,267		)	(14,309		)	(2,266		)	(16,575		)
Transaction costs	(2,153		)	(14		)	(2,167		)	(4,171		)	(20		)	(4,191		)
Depreciation and amortization	(48,624		)	(15,608		)	(64,232		)	(47,323		)	(14,160		)	(61,483		)
Interest	(32,082		)	(3		)	(32,085		)	(33,797		)	(3		)	(33,800		)
Interest on mandatorily redeemable preferred OP units	(790		)	—			(790		)	(789		)	—			(789		)
Catastrophic weather related charges	(7,718		)	(38		)	(7,756		)	—			—			—
Other income, net	3,345			—			3,345			—			—			—
Current tax benefit / (expense)	210			(172		)	38			(242		)	(41		)	(283		)
Deferred tax benefit	81			—			81			—			—			—
Income from affiliate transactions	—			—			—			500			—			500
Net income / (loss)	36,588			(7,630		)	28,958			27,406			(4,176		)	23,230
Less: Preferred return to preferred OP units	1,112			—			1,112			1,257			—			1,257
Less: Amounts attributable to noncontrolling interests	2,174			(398		)	1,776			1,133			(254		)	879
Net income / (loss) attributable to Sun Communities, Inc.	33,302			(7,232		)	26,070			25,016			(3,922		)	21,094
Less: Preferred stock distributions	1,955			—			1,955			2,197			—			2,197
Net income / (loss) attributable to Sun Communities, Inc. common stockholders	$	31,347		$	(7,232	)	$	24,115		$	22,819		$	(3,922	)	$	18,897



	Nine Months Ended September 30, 2017									Nine Months Ended September 30, 2016
	Real Property Operations			Home Sales and Rentals			Consolidated			Real Property Operations			Home Sales and Rentals			Consolidated
Revenues	$	592,864		$	129,093		$	721,957		$	482,002		$	117,683		$	599,685
Operating expenses/Cost of sales	220,902			84,820			305,722			176,176			76,440			252,616
Net operating income/Gross profit	371,962			44,273			416,235			305,826			41,243			347,069
Adjustments to arrive at net income / (loss):
Interest and other revenues, net	18,587			—			18,587			15,459			—			15,459
Home selling expenses	—			(9,391		)	(9,391		)	—			(7,240		)	(7,240		)
General and administrative	(49,082		)	(7,106		)	(56,188		)	(40,300		)	(6,610		)	(46,910		)
Transaction costs	(7,001		)	11			(6,990		)	(27,990		)	99			(27,891		)
Depreciation and amortization	(144,143		)	(45,576		)	(189,719		)	(118,296		)	(41,269		)	(159,565		)
Extinguishment of debt	(759		)	—			(759		)	—			—			—
Interest	(95,754		)	(11		)	(95,765		)	(88,512		)	(10		)	(88,522		)
Interest on mandatorily redeemable preferred OP units	(2,361		)	—			(2,361		)	(2,363		)	—			(2,363		)
Catastrophic weather related charges	(8,075		)	(49		)	(8,124		)	—			—			—
Other income, net	5,341			(1		)	5,340			—			—			—
Current tax expense	145			(278		)	(133		)	(445		)	(122		)	(567		)
Deferred tax benefit	745			—			745			—			—			—
Income from affiliate transactions	—			—			—			500			—			500
Net income / (loss)	89,605			(18,128		)	71,477			43,879			(13,909		)	29,970
Less: Preferred return to preferred OP units	3,482			—			3,482			3,793			—			3,793
Less: Amounts attributable to noncontrolling interests	5,163			(984		)	4,179			1,392			(932		)	460
Net income / (loss) attributable to Sun Communities, Inc.	80,960			(17,144		)	63,816			38,694			(12,977		)	25,717
Less: Preferred stock distributions	6,233			—			6,233			6,748			—			6,748
Net income / (loss) attributable to Sun Communities, Inc. common stockholders	$	74,727		$	(17,144	)	$	57,583		$	31,946		$	(12,977	)	$	18,969



	September 30, 2017						December 31, 2016
	Real Property Operations		Home Sales and Rentals		Consolidated		Real Property Operations		Home Sales and Rentals		Consolidated
Identifiable assets:
Investment property, net	$	5,112,302	$	461,523	$	5,573,825	$	5,019,165	$	450,316	$	5,469,481
Cash and cash equivalents	124,434		13,014		137,448		3,705		4,459		8,164
Inventory of manufactured homes	—		25,741		25,741		—		21,632		21,632
Notes and other receivables, net	132,748		13,012		145,760		68,901		12,278		81,179
Collateralized receivables, net	134,015		—		134,015		143,870		—		143,870
Other assets, net	137,303		3,744		141,047		143,650		2,800		146,450
Total assets	$	5,640,802	$	517,034	$	6,157,836	$	5,379,291	$	491,485	$	5,870,776