SOUTHFIELD, Mich., Nov. 6 /PRNewswire-FirstCall/ -- Sun
Communities, Inc. (NYSE:SUI) (the "Company"), a real estate
investment trust (REIT) that owns and operates manufactured housing
communities, today reported third quarter results. During the
quarter ended September 30, 2009, total revenues increased to $63.4
million as compared to $61.3 million in the third quarter of 2008.
Net loss for the third quarter of 2009 was $(2.0) million, or
$(0.11) per diluted common share, compared with a net loss of
$(5.5) million, or $(0.30) per diluted common share, for the same
period in 2008. Funds from operations ("FFO")(1) increased to $12.5
million, or $0.60 per diluted share/OP Unit, in the third quarter
of 2009 as compared to $11.3 million, or $0.55 per diluted share/OP
Unit, in the third quarter of 2008. Included in net loss for the
third quarter of 2009 is equity loss from affiliate of $0.8 million
from Origen Financial, Inc. ("Origen") and losses due to flood
damage of $0.8 million. Included in net loss for the third quarter
of 2008 is equity loss from Origen of $1.5 million. FFO(1) for the
third quarter of 2009 and 2008, adjusted for these items, would
have been $14.1 million, or $0.68 per diluted share/OP Unit, and
$12.8 million, or $0.62 per diluted share/OP Unit, respectively.
The aforementioned flood damage was sustained at one property near
Atlanta, Georgia. The Company continues to work with its insurer to
determine deductible amounts and covered damages. For the nine
months ended September 30, 2009, total revenues increased to $191.9
million, as compared to $188.0 million for the same period in 2008,
excluding $3.3 million in revenues from gain on sales of vacant
land. Net loss was $(3.4) million, or $(0.19) per diluted common
share, as compared to $(16.0) million, or $(0.88) per diluted
common share, for the nine months ended September 30, 2009 and
2008, respectively. FFO(1) increased to $41.3 million, or $1.99 per
diluted share/OP Unit, for the nine months ended September 30,
2009, as compared to $27.1 million, or $1.32 per diluted share/OP
Unit, for the same period in 2008. Included in net loss for the
nine months ended September 30, 2009 is equity loss from Origen of
$1.2 million and losses due to flood damage of $0.8 million.
Included in net loss for the nine months ended September 30, 2008
is equity loss from Origen of $14.1 million and severance charges
of $0.9 million. FFO(1) for the nine months ended September 30,
2009 and 2008, adjusted for these items, would have been $43.3
million, or $2.08 per diluted share/OP Unit, and $42.1 million, or
$2.05 per diluted share/OP Unit, respectively. "Except for rain and
reserves, we are happy with our third quarter results which allow
us to affirm guidance for the year," said Gary A. Shiffman,
Chairman and CEO. "Efforts to repair the flood damage at our
property are occurring swiftly and we commend our staff for their
quick response to help our displaced residents," said Shiffman.
"While we battled rain, our affiliate, Origen, battled increasing
mark to market loan loss reserves causing them to post a $4.3
million loss for the third quarter. Although reserves have
increased, Origen continues to report positive cash flow results as
the reserves have no impact on cash flow," Shiffman added. For 136
communities owned throughout 2009 and 2008, total revenues
increased 1.4 percent for the nine months ended September 30, 2009,
and total expenses increased 3.3 percent, resulting in an increase
in net operating income(2) of 0.6 percent. Same property occupancy
in manufactured housing sites was 82.3 percent at September 30,
2009 compared to 82.2 percent at September 30, 2008. For the nine
months ended September 30, 2009 and 2008, manufactured housing and
permanent recreational vehicle revenue producing sites increased by
243 and 88 sites, respectively, an increase of 155 sites period
over period. Manufactured housing and permanent recreational
vehicle revenue producing sites decreased by 46 for the third
quarter of 2009, compared to a decrease of 37 sites during the
third quarter of 2008. The Company rented an additional 232 homes
in the first nine months of 2009 bringing the total number of
occupied rentals to 5,749 at September 30, 2009. During the third
quarter of 2009, 293 new and pre-owned homes were sold, bringing
the total of homes sold year to date to 811, an increase of 9.3
percent from the 742 homes sold during the first nine months of
2008. Rental home sales, included in total new and pre-owned home
sales above, totaled 185 and 531 for the three and nine months
ended September 30, 2009, as compared to 151 and 443 for the same
periods in 2008. "Gross margins on home sales are increasing year
over year on new, pre-owned and rental home conversion sales. The
increases are being seen in all areas of the country including the
Midwest. While new and pre-owned sales provide for new revenue
producing sites, rental home conversion sales allow us to recycle
our capital by purchasing another home for use in our successful
rental program," Shiffman said. A conference call to discuss third
quarter operating results will be held on November 6, 2009, at
11:00 A.M. EST. To participate, call toll-free 877-407-9039.
Callers outside the U.S. or Canada can access the call at
201-689-8470. A replay will be available following the call through
November 20, 2009, and can be accessed by dialing 877-660-6853 from
the U.S. or 201-612-7415 outside the U.S. or Canada. The account
number for the replay is 3055 and the ID number is 336106. The
conference call will be available live on Sun Communities website
http://www.suncommunities.com/. Replay will also be available on
the website. Sun Communities, Inc. is a real estate investment
trust (REIT) that currently owns and operates a portfolio of 136
communities comprising approximately 47,600 developed sites. (1)
Funds from operations ("FFO") is defined by the National
Association of Real Estate Investment Trusts ("NAREIT") as net
income (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from sales of depreciable
operating property, plus real estate-related depreciation and
amortization, 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 the
Company's operating performance. Management generally considers FFO
to be a useful measure for reviewing comparative operating and
financial performance because, by excluding gains and losses
related to sales of previously depreciated operating real estate
assets and excluding real estate asset depreciation and
amortization (which can vary among owners of identical assets in
similar condition based on historical cost accounting and useful
life estimates), FFO provides a performance measure that, when
compared year over year, reflects the impact to operations from
trends in occupancy rates, rental rates and operating costs,
providing perspective not readily apparent from net income.
Management believes that 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. Because FFO excludes significant economic
components of net income including depreciation and amortization,
FFO should be used as an adjunct to net income and not as an
alternative to net income. The principal limitation of FFO is that
it does not represent cash flow from operations as defined by GAAP
and is a supplemental measure of performance that does not replace
net income as a measure of performance or net cash provided by
operating activities as a measure of liquidity. In addition, 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 only provides investors with an additional
performance measure. Other REITs may use different methods for
calculating FFO and, accordingly, the Company's FFO may not be
comparable to other REITs. (2) Investors in and analysts following
the real estate industry utilize net operating income ("NOI") as a
supplemental performance measure. NOI is derived from revenues
minus property operating expenses and real estate taxes. NOI does
not represent cash generated from operating activities in
accordance with GAAP and should not be considered to be an
alternative to net income (determined in accordance with GAAP) as
an indication of the Company's financial performance or to be an
alternative to cash flow from operating activities (determined in
accordance with GAAP) as a measure of the Company's liquidity; nor
is it indicative of funds available for the Company's cash needs,
including its ability to make cash distributions. The Company
believes that net income is the most directly comparable GAAP
measurement to net operating income. Net income includes interest
and depreciation and amortization which often have no effect on the
market value of a property and therefore limit its use as a
performance measure. In addition, such expenses are often incurred
at a parent company level and therefore are not necessarily linked
to the performance of a real estate asset. The Company believes
that net operating income is helpful to investors as a 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. The Company uses NOI as a key management
tool 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, and
therefore, NOI is a measure of the operating performance of the
properties of the Company rather than of the Company overall. For
more information about Sun Communities, Inc. visit our website at
http://www.suncommunities.com/ -FINANCIAL TABLES FOLLOW- FORWARD
LOOKING STATEMENTS This press release contains various
"forward-looking statements" within the meaning of the Securities
Act of 1933 and the Securities Exchange Act of 1934, and the
Company intends that such forward-looking statements will be
subject to the safe harbors created thereby. The words "will,"
"may," "could," "expect," "anticipate," "believes," "intends,"
"should," "plans," "estimates," "approximate", "guidance" and
similar expressions identify these forward-looking statements.
These forward-looking statements reflect the Company's current
views with respect to future events and financial performance, but
involve known and unknown risks and uncertainties, both general and
specific to the matters discussed in this press release. These
risks and uncertainties may cause the actual results of the Company
to be materially different from any future results expressed or
implied by such forward-looking statements. Such risks and
uncertainties include the ability of manufactured home buyers to
obtain financing, the level of repossessions by manufactured home
lenders and those referenced under the headings entitled "Factors
That May Affect Future Results" or "Risk Factors" contained in the
Company's filings with the Securities and Exchange Commission. The
forward-looking statements contained in this press release speak
only as of the date hereof and the Company expressly disclaims any
obligation to provide public updates, revisions or amendments to
any forward- looking statements made herein to reflect changes in
the Company's expectations of future events. ADOPTION OF NEW
ACCOUNTING STANDARDS The Company adopted Statement of Financial
Accounting Standards (SFAS) No. 160, "Noncontrolling Interests in
Consolidated Financial Statements", which is now included within
the FASB Accounting Standards Codification TM ("ASC") Topic 810,
Consolidation, in the first quarter of 2009 which required
reclassification of prior period financial information. This
updated guidance resulted in the presentation of noncontrolling
interest, previously referred to as minority interest, be reported
as a separate component of equity in our Consolidated Financial
Statements, and that losses be allocated to the noncontrolling
interest even if the allocation resulted in a deficit balance. SUN
COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
PERIODS ENDED SEPTEMBER 30, 2009 AND 2008 (In thousands, except per
share amounts) (Unaudited) Three Months Ended Nine Months Ended
September 30, September 30, ------------- ------------- 2009 2008
2009 2008 ---- ---- ---- ---- REVENUES Income from real property
$48,597 $47,788 $148,093 $145,792 Revenue from home sales 8,433
7,933 24,112 24,204 Rental home revenue 5,062 5,186 15,449 15,318
Ancillary revenues, net 4 35 261 349 Interest 1,554 1,129 4,194
2,741 Other income (loss) (258) (816) (161) 2,884 ---- ---- ----
----- Total revenues 63,392 61,255 191,948 191,288 ------ ------
------- ------- COSTS AND EXPENSES Property operating and
maintenance 13,249 12,469 38,641 36,857 Real estate taxes 3,848
3,844 12,150 12,183 Cost of home sales 6,046 6,073 17,313 18,893
Rental home operating and maintenance 3,864 4,135 12,423 11,566
General and administrative - real property 3,687 3,691 12,753
12,546 General and administrative - home sales and rentals 1,890
1,676 5,532 5,003 Georgia flood damage 800 - 800 - Depreciation and
amortization 15,841 16,025 47,960 48,097 Interest 15,109 15,361
44,093 45,311 Interest on mandatorily redeemable debt 839 847 2,509
2,535 --- --- ----- ----- Total expenses 65,173 64,121 194,174
192,991 ------ ------ ------- ------- Loss before income taxes and
equity loss from affiliates (1,781) (2,866) (2,226) (1,703)
Provision for state income tax (103) (141) (382) (34) Equity loss
from affiliates (854) (1,486) (1,344) (14,036) ---- ------ ------
------- Loss from continuing operations (2,738) (4,493) (3,952)
(15,773) Income (loss) from discontinued operations 177 (274) (155)
(785) --- ---- ---- ---- Net loss (2,561) (4,767) (4,107) (16,558)
Less: income (loss) attributable to noncontrolling interest (526)
726 (690) (602) ---- --- ---- ---- Net loss attributable to Sun
Communities, Inc. $(2,035) $(5,493) $(3,417) $(15,956) =======
======= ======= ======== Weighted average common shares
outstanding: Basic 18,513 18,213 18,437 18,151 Diluted 18,513
18,213 18,437 18,151 Basic and diluted income (loss) per share:
Continuing operations $(0.12) $(0.28) $(0.18) $(0.84) Discontinued
operations 0.01 (0.02) (0.01) (0.04) ---- ----- ----- ----- Basic
and diluted loss per share $(0.11) $(0.30) $(0.19) $(0.88) ======
====== ====== ====== Cash dividends per common share: $0.63 $0.63
$1.89 $1.89 SUN COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF
OPERATIONS, CONTINUED FOR THE PERIODS ENDED SEPTEMBER 30, 2009 AND
2008 (In thousands) (Unaudited) Three Months Ended Nine Months
Ended September 30, September 30, ------------- ------------- 2009
2008 2009 2008 ---- ---- ---- ---- Amounts attributable to Sun
Communities, Inc. common stockholders: Loss from continuing
operations, net of state income taxes $(2,193) $(5,190) $(3,278)
$(15,200) Income (loss) from discontinued operations, net of state
income taxes 158 (303) (139) (756) ----- ----- ----- ----- Loss
attributable to Sun Communities, Inc. $(2,035) $(5,493) $(3,417)
$(15,956) ===== ===== ===== ===== RECONCILIATION OF NET LOSS TO
FUNDS FROM OPERATIONS FOR THE PERIODS ENDED SEPTEMBER 30, 2009 AND
2008 (In thousands, except per share data) (Unaudited) Three Months
Ended Nine Months Ended September 30, September 30, -------------
------------- 2009 2008 2009 2008 ---- ---- ---- ---- Net loss
$(2,561) $(4,767) $(4,107) $(16,558) Adjustments: Depreciation and
amortization 16,329 16,667 49,364 49,930 Benefit for state income
taxes (3) (42) (7) (55) (405) Gain on disposition of assets, net
(1,237) (569) (3,933) (5,838) ------ ---- ------ ------ Funds from
operations (FFO) (1) $12,489 $11,324 $41,269 $27,129 =======
======= ======= ======= Weighted average Common Shares/OP Units
outstanding: Basic 20,856 20,504 20,787 20,448 ====== ====== ======
====== Diluted 20,856 20,571 20,787 20,499 ====== ====== ======
====== FFO per weighted average Common Share/OP Unit - Basic $0.60
$0.55 $1.99 $1.33 ===== ===== ===== ===== FFO per weighted average
Common Share/OP Unit - Diluted $0.60 $0.55 $1.99 $1.32 ===== =====
===== ===== The table below adjusts FFO to exclude equity loss from
affiliate (Origen Inc.), severance charges, and Georgia flood
damage charges (in thousands). Three Months Ended Nine Months Ended
September 30, September 30, ------------- ------------- 2009 2008
2009 2008 ---- ---- ---- ---- Net loss $(2,561) $(4,767) $(4,107)
$(16,558) Equity affiliate adjustment 836 1,500 1,211 14,050
Severance charges - - - 888 Georgia flood damage 800 - 800 - --- --
--- -- Adjusted net loss (925) (3,267) (2,096) (1,620) Depreciation
and amortization 16,329 16,667 49,364 49,930 Benefit for state
income taxes (3) (42) (7) (55) (405) Gain on disposition of assets,
net (1,237) (569) (3,933) (5,838) ------ ---- ------ ------
Adjusted funds from operations (FFO) (1) $14,125 $12,824 $43,280
$42,067 ======= ======= ======= ======= Adjusted FFO per weighted
average Common Share/OP Unit - Diluted $0.68 $0.62 $2.08 $2.05
===== ===== ===== ===== (3) The tax benefit for the periods ended
September 30, 2009 and 2008 represents the reversal of a tax
provision for potential taxes payable on the sale of company assets
related to the enactment of the Michigan Business Tax. These taxes
do not impact Funds from Operations and would be payable from
prospective proceeds of such sales. SUN COMMUNITIES, INC. SELECTED
BALANCE SHEET DATA (In thousands) (Unaudited) September 30,
December 31, 2009 2008 -------- -------- Investment property before
accumulated depreciation $1,562,345 $1,549,339 Total assets
$1,189,205 $1,206,999 Total debt $1,244,529 $1,229,571 Total
noncontrolling interest and stockholders' deficit $(95,457)
$(59,882) SUN COMMUNITIES, INC. CONSOLIDATED STATEMENTS OF
COMPREHENSIVE LOSS FOR THE PERIODS ENDED SEPTEMBER 30, 2009 AND
2008 (In thousands) (Unaudited) Three Months Ended Nine Months
Ended September 30, September 30, ------------- ------------- 2009
2008 2009 2008 ---- ---- ---- ---- Net loss $(2,561) $(4,767)
$(4,107) $(16,558) Unrealized gain (loss) on interest rate swaps
(494) 4 832 (64) ---- -- --- --- Total comprehensive loss (3,055)
(4,763) (3,275) (16,622) Less: Comprehensive income (loss)
attributable to the noncontrolling interest (324) 733 (347) (604)
---- --- ---- ---- Comprehensive loss attributable to Sun
Communities, Inc. $(2,731) $(5,496) $(2,928) $(16,018) =======
======= ======= ======== SUN COMMUNITIES, INC. ADDITIONAL
INFORMATION (Unaudited) SAME PROPERTY RESULTS For 136 communities
owned throughout both years (amounts in thousands): Three Months
Ended Nine Months Ended September 30, September 30, -------------
------------- 2009 2008 % Change 2009 2008 % Change ---- ----
-------- ---- ---- -------- Total revenue $45,915 $45,221 1.5 %
$140,405 $138,488 1.4 % Total expense 14,415 13,746 4.9 % 43,103
41,736 3.3 % ------ ------ --- ------ ------ --- Net operating
income(2) $31,500 $31,475 0.1 % $97,302 $96,752 0.6 % ====== ======
=== ====== ====== ==== Same property occupancy and average monthly
rent information at September 30, 2009 and 2008: 2009 2008 ----
---- Total manufactured housing sites 42,301 42,289 Occupied
manufactured housing sites 34,813 34,775 Manufactured housing
occupancy % 82.3 % 82.2 % Average monthly rent per site $402 $390
SUN COMMUNITIES, INC. ADDITIONAL INFORMATION, CONTINUED (Unaudited)
RENTAL PROGRAM SUMMARY (In thousands, except for certain items
marked with *) Three Months Ended Nine Months Ended September 30,
September 30, ------------- ------------- 2009 2008 2009 2008 ----
---- ---- ---- Rental home revenue $5,062 $5,186 $15,449 $15,318
Site rent from Rental Program 6,738 6,150 19,861 18,278 ----- -----
------ ------ Rental Program revenue 11,800 11,336 35,310 33,596
Expenses Payroll and commissions 556 524 1,935 1,601 Repairs and
refurbishment 1,761 2,011 5,729 5,380 Taxes and insurance 777 701
2,323 2,094 Marketing and other 770 899 2,436 2,491 --- --- -----
----- Rental Program operating and maintenance 3,864 4,135 12,423
11,566 ----- ----- ------ ------ Net operating income(2) $7,936
$7,201 $22,887 $22,030 ====== ====== ======= ======= Occupied
rental homes information as of and for the nine months ended
September 30, 2009 and 2008: Other Information 2009 2008 % Change
----------------- ---- ---- -------- Number of occupied rentals,
end of period* 5,749 5,449 5.5 % Investment in occupied rental
homes $180,118 $166,735 8.0 % Number of sold rental homes* 531 443
19.9 % Weighted average monthly rental rate* $726 $733 DATASOURCE:
Sun Communities, Inc. CONTACT: Karen J. Dearing, Chief Financial
Officer, +1-248-208-2500 Web Site: http://www.suncommunities.com/
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