Sun Communities Inc: Form 10-Q for the period ended Sep 30, 2025

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 the accompanying Notes, along with our 2024 Annual Report.

OVERVIEW

We are a fully integrated REIT. As of September 30, 2025, we owned and operated, directly or indirectly, or had an interest in, a portfolio of 501 developed properties located in the U.S., Canada, and the United Kingdom including 284 MH communities, 164 RV communities, and 53 UK communities.

We have been in the business of operating, acquiring, developing and expanding MH and RV communities since 1975, and communities in the United Kingdom 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 are also engaged in the marketing, selling and leasing of new and pre-owned homes to current and future residents in our MH communities. The rental program operations within our MH communities support and enhance our occupancy levels, property performance and cash flows. Our RV communities are designed to offer affordable vacation opportunities to individuals and families complemented by a diverse selection of high-quality amenities. In the United Kingdom, our UK 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.

SAFE HARBOR SALE

In April 2025, we completed the initial closing of the Safe Harbor Sale, which generated approximately $5.25 billion of pre-tax cash proceeds, net of transaction costs, with a gain on sale of $1.4 billion. Pursuant to the terms of the transaction agreement, 15 Delayed Consent Subsidiaries representing approximately $250.0 million of value were not part of the initial closing. Subsequent to the initial closing through June 30, 2025, we completed the sale of six Delayed Consent Subsidiaries for $136.7 million. On August 29, 2025, we completed the sale of the remaining nine Delayed Consent Subsidiaries for $117.5 million and fully divested our investment in the Safe Harbor business.

The Safe Harbor Sale accelerates our strategy of focusing on our core MH and RV segments and significantly enhances our leverage profile and financial flexibility. Since the closing of the Safe Harbor Sale, we have deployed the cash proceeds from the Safe Harbor Sale to implement a balanced, tax-efficient capital allocation plan aimed at optimizing shareholder value through significantly lower leverage, greater financial flexibility to drive sustainable cash flow growth, and a thoughtful capital return strategy.

Refer to Part 1, Item 1A, "Risk Factors – Risks Related to the Safe Harbor Sale" in our Annual Report on Form 10-K for the year ended December 31, 2024, Note 2, "Assets Held for Sale and Discontinued Operations," in our accompanying Consolidated Financial Statements for additional details related to the Safe Harbor Sale.

Chief Executive Officer Transition

Charles D. Young began serving as the our Chief Executive Officer and as a Director on October 1, 2025. Mr. Young succeeds Gary Shiffman, who previously announced his retirement from the role of CEO after a distinguished 40 years leading Sun Communities. The Company and Mr. Young entered into an employment agreement under which Mr. Young will serve as our CEO for a five year term, which is automatically renewable thereafter for successive one-year terms unless either party timely terminates the agreement. Refer to the Form 8-K filed with the SEC on July 23, 2025 for additional details related to Mr. Young's Employment Agreement.

SIGNIFICANT ACCOUNTING POLICIES

We have identified significant accounting policies that, as a result of the judgments, uncertainties, and complexities of the underlying accounting standards and operations involved could result in material changes to our financial condition or results of operations under different conditions or using different assumptions. Details regarding significant accounting policies are described fully in our Annual Report on Form 10-K for the year ended December 31, 2024.

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 property 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.

Same Property NOI - This is a key 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, 2024. Same properties exclude ground-up development properties, acquired properties, properties classified as discontinued operations, and properties sold after December 31, 2023. 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 ancillary 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 nonconsolidated 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"). These adjustments include acquisition and other transaction costs, gains and losses from the early extinguishment of debt, costs related to catastrophic weather events, net of insurance recoveries, gains and losses on foreign currency exchanges, and other miscellaneous non-comparable items.

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.

RESULTS OF OPERATIONS

The following tables reconcile the Net income attributable to SUI common shareholders to NOI and summarize our consolidated financial results for the three and nine months ended September 30, 2025 and 2024 (in millions):

(1) Excludes properties classified as discontinued operations. During the three and nine months ended September 30, 2025, our marina properties generated total NOI of $1.5 million and $93.7 million, respectively. During the three and nine months ended September 30, 2024, our marina properties generated total NOI of $89.5 million and $243.3 million, respectively, which was recorded within Income from discontinued operations, net on the Consolidated Statements of Operations. Refer to Note 2, "Assets Held for Sale and Discontinued Operations," for additional information.

Seasonality of Revenue

The RV 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. During the nine months ended September 30, 2025, we recognized aggregate Real property - transient revenue from our segments of $30.5 million in the first quarter, $81.4 million in the second quarter and $133.5 million in the third quarter.

During the year ended December 31, 2024, we recognized Real property - transient revenue as follows:

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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 three and nine months ended September 30, 2025 and 2024 (in millions, except for statistical information).

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

(1) MH annual sites included 11,856 and 10,457 rental homes in our rental program as of September 30, 2025 and 2024, respectively. Our investment in occupied rental homes at September 30, 2025 was $863.4 million, an increase of 18.4% from $729.5 million at September 30, 2024.

For the three months ended September 30, 2025, the $16.1 million, or 5.3% increase in Real Property NOI as compared to the same period in 2024, consists of an increase of $15.7 million from Same Property MH NOI and an increase of $1.7 million from Same Property UK NOI, partially offset by a decrease of $1.2 million from Same Property RV NOI and an NOI decrease of $0.1 million, net from other recently acquired or developed properties and other items.

For the nine months ended September 30, 2025, the $23.5 million, or 3.0% increase in Real Property NOI as compared to the same period in 2024, consists of an increase of $41.8 million from Same Property MH NOI and an increase of $3.2 million from Same Property UK NOI, partially offset by an NOI decrease of $15.0 million, net from properties outside of the Same Property population due to portfolio disposition activity that took place in 2024, primarily driven by the disposition of 10 MH properties for total gross sales proceeds of $349.1 million, and a decrease of $6.5 million from Same Property RV NOI.

Real Property Operations - North America Same Property Portfolio

Same Property data includes all properties that we have owned and operated continuously since January 1, 2024, exclusive of properties recently completed or under construction, acquired properties, properties classified as discontinued operations, other properties as determined by management, and properties sold after December 31, 2023. 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 statement. 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. Additionally, prior period Canadian currency figures have been translated at 2025 average exchange rates for constant currency comparability.

The following tables reflect certain financial and other information for our Same Property MH and RV portfolios as of and for the three and nine months ended September 30, 2025 and 2024 (in millions, except for statistical information):

(1) 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 three and nine months ended September 30, 2025 of $0.6956 and $0.7102 USD per Canadian dollar, respectively.

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

(3) Percentages are calculated based on unrounded numbers.

(4) 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.

N/A = Not applicable.

(1) Same Property adjusted blended occupancy for MH and RV combined increased to 99.2% at September 30, 2025, from 97.9% at September 30, 2024. The 130 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 98.5% at September 30, 2025, up 60 basis points from 97.9% at September 30, 2024.

(2) Calculated using actual results without rounding.

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

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 three and nine months ended September 30, 2025 and 2024 (in millions, except for statistical information):

(1) Same Property results for our UK properties reflect constant currency for comparative purposes. United Kingdom currency figures in the prior comparative period have been translated at the average exchange rate of $1.2400 and $1.2958 USD per pound sterling, during the three and nine months ended September 30, 2025, respectively.

(2) Percentages are calculated based on unrounded numbers.

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

UK Same Property Summary

(1) Adjusting for recently delivered and vacant expansion sites, Same Property adjusted occupancy decreased by 90 basis points year over year, to 91.3% at September 30, 2025, from 92.2% at September 30, 2024.

(2) Calculated using actual results without rounding.

For the three months ended September 30, 2025 and 2024:

• The MH segment increase in NOI of $15.7 million, or 10.1%, when compared to the same period in 2024 is primarily due to an increase in Real property (excluding transient) revenue of $15.9 million, or 7.3%. Real property (excluding transient) revenue increased primarily due to a 5.3% increase in monthly base rent and occupancy gains on a year-over-year basis.
• The RV segment decrease in NOI of $1.2 million, or 1.1%, when compared to the same period in 2024 is primarily due to a decrease in Real property transient revenue of $8.3 million, or 7.8%, partially offset by an increase in Real property (excluding transient revenue) of $6.5 million, or 8.1% and a decrease in Same property operating expenses of $0.6 million, or 0.8%. The increase in Real property (excluding transient) revenue was primarily due to a 5.1% increase in monthly base rent and conversions of transient RV sites to annual RV sites.
• The UK segment increase in NOI of $1.7 million, or 5.4%, when compared to the same period in 2024 is primarily due to an increase in Real property (excluding transient) revenue of $1.1 million, or 4.1% and Real property transient revenue growth of $1.5 million, or 5.6%, partially offset by an increase in Same property operating expenses by $0.9 million, or 4.0%. The increase in Real property revenue was primarily due to a 7.2% increase in monthly base rent per site. The increase in Same Property operating expenses was due to increases in payroll wages, utilities and leasing costs.

For the nine months ended September 30, 2025 and 2024:

• The MH segment increase in NOI of $41.8 million, or 8.9%, when compared to the same period in 2024 is primarily due to an increase in Real property (excluding transient) revenue of $46.3 million, or 7.2%. Real property (excluding transient) revenue increased primarily due to a 5.3% increase in monthly base rent and occupancy gains on a year-over-year basis.
• The RV segment decrease in NOI of $6.5 million, or 2.8%, when compared to the same period in 2024 is primarily due to a decrease in Real property transient revenue of $19.4 million, or 9.5%, and an increase in Same property operating expenses of $4.0 million, or 2.1%, partially offset by an increase in Real property (excluding transient) revenue of $16.9 million, or 7.9%. The decrease in Real property transient revenue was primarily due to transient to annual RV site conversions. 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 5.1% increase in monthly base rent and conversions of transient RV sites to annual RV sites.
• The UK segment increase in NOI of $3.2 million, or 5.2%, when compared to the same period in 2024 is primarily due to the $3.2 million, or 4.1%, increase in Real property (excluding transient) revenue and an increase in Real property transient revenue of $3.2 million, or 7.7%, partially offset by an increase of $3.2 million, or 5.6%, in Same property operating expenses. The increase in Real property (excluding transient) revenue was primarily due to a 7.2% increase in monthly base rent per site. The increase in Same property operating expenses was primarily due to increases in payroll wages, utilities and other expenses.

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 three and nine months ended September 30, 2025 and 2024 (in millions, except for average selling price and statistical information):

NOI - North America

For the three months ended September 30, 2025, the 20.5% decrease in NOI was primarily driven by a 27.5% decrease in units sold, primarily driven by fewer available sites in conjunction with reduced expansion and development activity.

For the nine months ended September 30, 2025, the 37.1% decrease in NOI was primarily driven by an 18.3% decrease in units sold, primarily driven by fewer available sites in conjunction with reduced expansion and development activity, as well as a 3.9% decrease in average selling price.

NOI - UK

For the three months ended September 30, 2025, the 21.2% decrease in NOI was primarily driven by a 7.8% decrease in NOI margin and 11.5% decrease in units sold, partially offset by a 12.1% increase in average selling price.

For the nine months ended September 30, 2025, the 11.4% decrease in NOI was primarily driven by a 6.2% decrease in NOI margin and a 4.1% decrease in units sold, partially offset by a 12.2% increase in average selling price.

Other Items - Statements of Operations(1)

The following table summarizes other income and expenses for the three and nine months ended September 30, 2025 and 2024 (in millions):

(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.

Ancillary, net - for the three months ended September 30, 2025, increased primarily due to an increased emphasis on expense management and cost saving initiatives.

Interest income - for the three and nine months ended September 30, 2025, increased due to the interest earned on our increased cash balance from the Safe Harbor Sale.

Catastrophic event-related charges, net - for the nine months ended September 30, 2025, decreased primarily due to asset impairment and debris removal charges, net of insurance recoveries, of $10.6 million in the prior period, driven by flooding at an RV community in New Hampshire.

Asset impairments - for the three and nine months ended September 30, 2025, increased due to asset impairment charges at 19 properties in the U.S., Canada, and the UK, driven by, in certain cases, a change in strategic plan for the properties, and in other cases, a decrease in projected future cash flows for the properties. Refer to Note 17, "Fair Value Measurements," in our accompanying Consolidated Financial Statements for additional information.

Loss on extinguishment of debt - for the nine months ended September 30, 2025, increased primarily due to the recognition of early extinguishment premiums of $102.4 million, due to the settlement of $3.2 billion of debt obligations using proceeds generated from the Safe Harbor Sale. Refer to Note 10, "Debt and Line of Credit," in our accompanying Consolidated Financial Statements for additional information.

Interest expense - for the three and nine months ended September 30, 2025, decreased primarily due to the settlement of $3.2 billion in debt obligations using proceeds generated from the Safe Harbor Sale. Refer to Note 10, "Debt and Line of Credit," in our accompanying Consolidated Financial Statements for additional information.

Gain / (loss) on foreign currency exchanges - for the three and nine months ended September 30, 2025, was a loss of $22.6 million and gain of $25.5 million, respectively, as compared to a loss of $4.5 million and $6.2 million, respectively, during the same period in 2024 primarily due to the settlement of six foreign currency forward swaps, as well as the fluctuation of the U.S. dollar versus the pound sterling. Refer to Note 16, "Derivative Financial Instruments," in our accompanying Consolidated Financial Statements for additional information.

Gain / (loss) on dispositions of properties - for the three and nine months ended September 30, 2025, was a loss of $1.3 million and $3.7 million, respectively, as compared to a gain of $178.7 million and $186.6 million, respectively, during the same periods in 2024, driven by property dispositions in each period. Refer to Note 5, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated Financial Statements for additional information.

Other income / (expense), net - for the three and nine months ended September 30, 2025, was income of $19.1 million and $56.7 million, respectively, primarily due to long-term lease termination gains on the repurchase of titles to 27 UK properties previously controlled via ground leases, as compared to an expense of $0.8 million and $4.3 million, respectively, during the same periods in 2024. Refer to Note 19, "Leases," in our accompanying Consolidated Financial Statements for additional information.

Income from nonconsolidated affiliates - for the three months ended September 30, 2025, was income of $4.3 million, as compared to income of $2.1 million during the same period in 2024 primarily due to the increased performance of our Sungenia joint venture in Australia. Refer to Note 9, "Investments in Nonconsolidated Affiliates," in our accompanying Consolidated Financial Statements for additional information.

Gain / (loss) on remeasurement of investment in nonconsolidated affiliates - for the nine months ended September 30, 2025, was a loss of $1.1 million as compared to a gain of $6.5 million during the same period in 2024 due to the fluctuation in the fair value of a notes receivable portfolio held at our GTSC joint venture. Refer to Note 9, "Investments in Nonconsolidated Affiliates," in our accompanying Consolidated Financial Statements for additional information.

Current tax benefit / (expense) - for the three months ended September 30, 2025, was an expense of $3.8 million, as compared to a benefit of $1.0 million during the same period in 2024 primarily due to improved performance at our UK properties as compared to 2024, and tax planning efforts at our UK operations in 2024.

Deferred tax benefit - for the nine months ended September 30, 2025, increased primarily due to the recognition of a deferred tax benefit of $29.0 million in conjunction with the impairment of three development properties in the UK. Refer to Note 17, "Fair Value Measurements," in our accompanying Consolidated Financial Statements for additional information.

Income from discontinued operations, net - for the three and nine months ended September 30, 2025, was $14.6 million and $1.4 billion, as compared to $26.8 million and $63.7 million, respectively, in the same periods in 2024, primarily due to the gain recognized on the closing of the Safe Harbor Sale and subsequent closing of the Delayed Consent Subsidiaries in the current period.

RECONCILIATION OF NET INCOME ATTRIBUTABLE TO SUI COMMON SHAREHOLDERS TO FFO

The following table reconciles Net income attributable to SUI common shareholders to FFO for the three and nine months ended September 30, 2025 and 2024 (in millions, except for per share amounts):

(1) Assumes full conversion of all equity participating units, including common and preferred OP units, into our common stock, and has no material impact on previously reported results.

(2) These costs represent (i) nonrecurring integration expenses associated with acquisitions during the three and nine months ended September 30, 2025 and 2024, (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. Acquisition and other transaction costs - discontinued operations primarily represent non-recurring costs directly attributable to the Safe Harbor Sale.

(3) Loss of earnings - catastrophic event-related charges, net include the following:

(4) Other adjustments, net - continuing operations relates primarily to deferred tax benefits and long-term lease termination gains during the three and nine months ended September 30, 2025 and 2024, and Other adjustments, net - discontinued operations relates primarily to a contingent consideration expense during the nine months ended September 30, 2025 and litigation settlement gains during the nine months ended September 30, 2024.

(5) FFO and Core FFO includes discontinued operations activity of $1.0 million or $0.01 per Share, and $1.5 million or $0.01 per Share, respectively, during the three months ended September 30, 2025, and $75.1 million or $0.58 per Share, and $75.8 million or $0.59 per Share, respectively, during the three months ended September 30, 2024.

(6) FFO and Core FFO include discontinued operations activity of $(1.8) million or $(0.01) per Share, and $76.7 million or $0.58 per Share, respectively, during the nine months ended September 30, 2025, and $208.0 million or $1.61 per Share, and $201.4 million or $1.56 per Share, respectively, during the nine months ended September 30, 2024.

LIQUIDITY AND CAPITAL RESOURCES

Short-term Liquidity

Our principal short-term liquidity demands are expected to consist of distributions to our shareholders and the unit holders of the Operating Partnership through cash distributions and share repurchases, property acquisitions, development and expansion of our properties, capital improvement of our properties, and the purchase of new and pre-owned homes. We intend to meet our short-term liquidity requirements through available cash balances, cash flow generated from operations, cash generated from the Safe Harbor Sale, draws on our senior credit facility, and the use of debt and equity offerings under our shelf registration statement.

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. During the three months ended June 30, 2025, we completed the initial closing of the Safe Harbor Sale, which generated pre-tax cash proceeds of approximately $5.25 billion, net of transaction costs. Subsequent to the initial closing through August 29, 2025, we completed the sale of 15 Delayed Consent Subsidiaries for $254.2 million and fully divested our investment in the Safe Harbor business. The Safe Harbor Sale advances our strategy of focusing on our core MH and RV segments and enhances our leverage profile and financial flexibility. We have deployed the cash proceeds from the Safe Harbor Sale to implement a capital allocation plan that reflects a balanced, tax-efficient approach to optimize shareholder value through significantly lower leverage, greater financial flexibility to drive sustainable cash flow growth, and a thoughtful capital return strategy. We intend to maintain our strong financial position and lower leverage profile 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.

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. For the remainder of 2025, we continue to expect rental rate growth that exceeds headline inflation with ongoing focus on expense management to continue generating strong organic cash flow growth.

In connection with cash proceeds generated from the Safe Harbor Sale, through September 30, 2025, we initiated the following capital allocation decisions:

• Repaid approximately $3.3 billion of debt, including $1.6 billion of outstanding borrowings under our senior credit facility, as well as $737.7 million in secured mortgage debt, and $956.5 million in unsecured notes, inclusive of prepayment costs.
• Returned capital to shareholders, including the payment of a special cash distribution of $4.00 per share, totaling $521.3 million, and the initiation of our Stock Repurchase Program.
• Repurchased 4.0 million shares of our common stock at an average cost of $125.74 per share for a total of $500.3 million.
• Targeted reinvestment in strategic growth by allocating $629.5 million into 1031 exchange escrow accounts to fund potential future MH and RV acquisitions. Refer to the "Acquisitions, Dispositions, Development, and Expansion Activities" section below for acquisitions that closed subsequent to September 30, 2025.
• Initiated other opportunistic financial enhancements, including deploying cash of $323.6 million to repurchase the titles to 28 UK properties that were previously controlled via ground leases through October 30, 2025. We have also contractually agreed to repurchase the titles to an additional five UK properties for approximately $63.0 million, which we expect to close by the end of the first quarter of 2026.

Refer to Note 1, "Basis of Presentation," and Note 2, "Assets Held for Sale and Discontinued Operations," for additional details related to the Safe Harbor Sale. Refer to Note 19, "Leases," for additional details related to the UK long-term lease terminations. Refer to Note 21, "Subsequent Events," for additional details related to acquisitions that closed subsequent to September 30, 2025.

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. As of September 30, 2025, we had allocated restricted cash of $629.5 million into 1031 exchange escrow accounts to fund potential future MH and RV acquisitions. In October 2025, we acquired 11 MH and three RV properties for total cash consideration of $457.0 million. Given the higher interest rate environment, we continue to selectively pursue acquisition and development opportunities that meet our underwriting criteria.

We have continued a targeted disposition program to divest non-strategic assets in an effort to simplify management and maintain financial flexibility. During the nine months ended September 30, 2025, we sold three MH properties, three RV properties, and one MH and one RV development land parcel for a gross sale price of approximately $182.2 million.

We plan to selectively expand our properties utilizing our inventory of owned and entitled land. We have 15,860 MH and RV sites suitable for future development. Refer to Note 5, "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):

Refer to the "Liquidity and Capital Resources" section in Part II, Item 7 of our 2024 Annual Report for capital expenditure activity definitions and additional information.

Cash Flow Activities

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

Cash, cash equivalents and restricted cash increased by $1.1 billion from $57.1 million as of December 31, 2024, to $1.2 billion as of September 30, 2025.

Operating activities - Net cash provided by operating activities increased by $91.3 million to $641.3 million for the nine months ended September 30, 2025, compared to $550.0 million for the nine months ended September 30, 2024. The increase in operating cash flow was primarily due to growth in Same Property operating performance at our MH and UK properties, partially offset by the timing of changes in inventory, other assets, and other liabilities, and reduced operating performance at our RV properties during the nine months ended September 30, 2025 as compared to the corresponding period in 2024.

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 of our 2024 Annual Report, and Part II, Item 1A of our Quarterly Report on Form 10-Q for the three months ended March 31, 2025.

Investing activities - Net cash used for investing activities was $127.9 million for the nine months ended September 30, 2025, compared to net cash provided by investing activities of $22.8 million for the nine months ended September 30, 2024. The change in Net cash provided by / (used for) investing activities was primarily driven by a decrease in proceeds received from the disposition of MH and RV properties, and partially offset by the settlements of notes receivable from real estate developers during the nine months ended September 30, 2025 as compared to the corresponding period in 2024.

Financing activities - Net cash provided by financing activities was $606.4 million for the nine months ended September 30, 2025, compared to net cash used for financing activities of $542.7 million for the nine months ended September 30, 2024. The change in Net cash provided by / (used for) financing activities was primarily driven by a net capital transfer of $5.5 billion from Safe Harbor to the Company in conjunction with the Safe Harbor Sale, partially offset by an increase in cash deployed to settle debt obligations and distribute cash to shareholders through share repurchases and a special cash dividend paid in May 2025 during the nine months ended September 30, 2025 as compared to the corresponding period in 2024. Refer to Note 10, "Debt and Line of Credit," and Note 11, "Equity and Temporary Equity," in our accompanying Consolidated Financial Statements for additional information.

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

Cash, cash equivalents and restricted cash for discontinued operations decreased by $6.8 million from $6.8 million as of December 31, 2024, to zero as of September 30, 2025.

Operating activities - Net cash provided by operating activities for discontinued operations decreased by $136.6 million to $56.4 million for the nine months ended September 30, 2025, compared to $193.0 million for the nine months ended September 30, 2024. The decrease in net cash provided by operating activities for discontinued operations was due to a reduction in owned marinas, due to the closing of the Safe Harbor Sale during the nine months ended September 30, 2025 as compared to the corresponding period in 2024.

Investing activities - Net cash provided by investing activities for discontinued operations was $5.5 billion for the nine months ended September 30, 2025, compared to net cash used for investing activities for discontinued operations of $188.4 million for the nine months ended September 30, 2024. The change in net cash provided by / (used for) investing activities for discontinued operations is driven by cash proceeds received from the closing of the Safe Harbor Sale.

Financing activities - Net cash used for financing activities for discontinued operations was $5.6 billion for the nine months ended September 30, 2025, compared to net cash provided by financing activities for discontinued operations of $3.8 million for the nine months ended September 30, 2024. The change in net cash provided by / (used for) financing activities for discontinued operations is driven by the net capital transfer of $5.5 billion from Safe Harbor to the Company in conjunction with the Safe Harbor Sale.

Refer to the Consolidated Statements of Cash Flows for detail on the net cash used for financing activities for discontinued operations during the nine months ended September 30, 2025 and 2024. Refer to Note 2, "Assets Held for Sale and Discontinued Operations," in our accompanying Consolidated Financial Statements for additional information.

The absence of future cash flows from discontinued operations is not expected to significantly impact our liquidity, as the cash proceeds from the Safe Harbor Sale have been allocated to pay down debt, which will generate annualized interest expense savings, and to reinvest in our core MH and RV segments by means of a $629.5 million cash allocation to 1031 exchange escrow accounts as of September 30, 2025. Subsequent to the nine months ended September 30, 2025, we allocated $399.0 million of restricted cash from the 1031 exchange escrow account and $58.0 million of unrestricted cash to acquire 11 MH and three RV communities. Refer to Note 21, "Subsequent Events," for more information.

We are exposed to interest rate variability associated with potential floating rate debt and any maturing debt that has to be refinanced. Interest rate movements impact our borrowing costs and, while as of September 30, 2025, approximately 100% of our total debt was fixed rate financing, increases in interest costs have the potential to adversely affect our financial results.

Equity and Debt Activity

At the Market Offering Sales Agreement

We have entered into the ATM program 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. Through September 30, 2025, 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.

Stock Repurchase Program

In May 2025, our Board of Directors authorized a stock repurchase program under which we may repurchase up to $1.0 billion in shares of our outstanding common stock through April 30, 2026. Under the Stock Repurchase Program, we may repurchase shares of our common stock in open market transactions, through privately negotiated transactions, through one or more accelerated repurchases, or otherwise, in accordance with the terms set forth in Rule 10b5-1 and Rule 10b-18 of the Exchange Act and other applicable legal requirements. The Stock Repurchase Program does not obligate us to repurchase any specific number of shares, and we may initiate, suspend, or discontinue purchases under the Stock Repurchase Program at any time.

All repurchased shares are retired and returned to authorized but unissued status upon settlement. Through September 30, 2025, we repurchased and retired 4.0 million shares of our outstanding common stock for $500.3 million. As of September 30, 2025, we had $499.7 million remaining authorized for purchase under this program.

Senior Unsecured Notes

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

During the three months ended June 30, 2025, we redeemed the aggregate principal amount of $900.0 million on the 2029 Notes and the 2033 Notes using cash proceeds generated from the Safe Harbor Sale. In accordance with the terms of each series of Notes, the redemption price was inclusive of a customary make-whole premium and accrued and unpaid interest. As a result, during the three months ended June 30, 2025, we recorded charges of $56.5 million to Loss on extinguishment of debt on the Consolidated Statements of Operations in connection with early extinguishment premiums on the 2029 and 2033 Note Redemptions. Refer to Note 16, "Derivative Financial Instruments," for cash flow hedge activity resulting from the redemptions.

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.

New Credit Agreement

On September 17, 2025, we entered into the New Credit Agreement, which replaced our previous $3.05 billion senior credit facility.

Pursuant to the New Credit Agreement, we may borrow up to $2.0 billion under the New Credit Facility. The New Credit Agreement also permits, subject to the satisfaction of certain conditions, additional borrowings of $1.0 billion. The New Credit Facility's maturity date is January 31, 2030, and, at our option, may be extended for two additional six-month periods subject to the satisfaction of certain conditions.

The New Credit Facility offers various interest rates for borrowings under U.S. dollars (at the ABR, Term SOFR, and Daily Effective SOFR), euros (at the Adjusted EURIBOR), pound sterling (at the Daily Simple SONIA Rate), Canadian dollars (at the Term CORRA) and the Daily Simple CORRA), and Australian dollars (at the Australian BBSY Rate,) plus a margin which can range from 0.725% to 1.40% for all interest rates except ABR loans, which can range from 0.000% to 0.400%. As of September 30, 2025, there were no borrowings under the New Credit Facility.

During the three months ended September 30, 2025, we recorded charges of $1.6 million to Loss on extinguishment of debt on the Consolidated Statements of Operations related to the write off of deferred financing costs in connection with the termination of our previous senior credit facility. As of September 30, 2025, we also recorded deferred financing costs of $11.4 million in connection with the New Credit Facility, which was recorded within Other assets, net on the Consolidated Balance Sheets.

The New Credit Facility provides us with the ability to issue up to $100.0 million of letters of credit. We had $10.3 million and $11.5 million of outstanding letters of credit at September 30, 2025 and December 31, 2024, 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:

(1) As of September 30, 2025, we did not have any borrowings outstanding under the senior credit facility.

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

As of September 30, 2025, 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.

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 September 30, 2025 we had unrestricted cash on hand of $542.7 million, $2.0 billion of remaining capacity on the senior credit facility, and a total of 391 unencumbered MH, RV, 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 and RV 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. See "Risk Factors" in Part I, Item 1A of our 2024 Annual Report. 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 September 30, 2025, our net debt to enterprise value was 18.3% (assuming conversion of all common and preferred OP units to shares of common stock). Our debt has a weighted average interest rate of 3.38% and a weighted average maturity of 7.4 years.

Capital Requirements

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 9, "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 $275.0 million. As of September 30, 2025 and December 31, 2024, the aggregate carrying amount of debt, including both our and our partner's share, incurred by GTSC was $220.0 million (of which our proportionate share is $88.0 million), and $242.9 million (of which our proportionate share is $97.1 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 $35.8 million converted at the September 30, 2025 exchange rate. As of September 30, 2025 and December 31, 2024, the aggregate carrying amount of the debt, including both our and our partners' share, incurred by Sungenia JV was $24.6 million (of which our proportionate share is approximately $12.3 million), and $25.0 million (of which our proportionate share is $12.5 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.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains various "forward-looking statements" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act, and we intend that such forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this document that relate to expectations, beliefs, projections, future plans and strategies, trends or prospective events, or developments and similar expressions concerning matters that are not historical facts are deemed to be forward-looking statements. Words such as "forecasts," "intend," "goal," "estimate," "expect," "project," "projections," "plans," "predicts," "potential," "seeks," "anticipates," "should," "could," "may," "will," "designed to," "foreseeable future," "believe," "scheduled," "guidance," "target," and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements reflect our current views with respect to future events and financial performance, but involve known and unknown risks, uncertainties, and other factors, both general and specific to the matters discussed in this document, some of which are beyond our control. These risks, uncertainties, and other factors may cause our actual results to be materially different from any future results expressed or implied by such forward-looking statements. In addition to the risks disclosed under "Risk Factors" in our 2024 Annual Report, in Part II, Item 1A of our Quarterly Report on Form 10-Q for the three months ended March 31, 2025, and in our other filings with the SEC, from time to time, such risks, uncertainties and other factors include, but are not limited to:

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. We undertake no obligation to publicly update or revise any forward-looking statements included or incorporated by reference into this document, whether as a result of new information, future events, changes in our expectations or otherwise, except as required by law.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. All written and oral forward-looking statements attributable to us or persons acting on our behalf are qualified in their entirety by these cautionary statements.

Market risk is the exposure to loss resulting from changes in market factors such as interest rates, foreign currency exchange rates, commodity prices, and equity prices.

Interest Rate Risk

Our principal market risk exposure is interest rate risk. We mitigate this risk by maintaining prudent amounts of leverage, minimizing capital costs, and interest expense while continuously evaluating all available debt and equity resources and following established risk management policies and procedures, which include the periodic use of derivatives. Our primary strategy in entering into derivative contracts is to minimize the variability that interest rate changes could have on our future cash flows. From time to time, we employ derivative instruments that effectively convert a portion of our variable rate debt to fixed rate debt. We do not enter into derivative instruments for speculative purposes. As of September 30, 2025, all of our outstanding debt obligations bore interest at fixed rates, which minimizes the impact of interest rate variability on our results of operations and cash flows in the near term. Additionally, we have exposure to long-term interest rates, which could affect the cost of refinancing existing debt or incurring additional debt in the future.

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate risk is the risk that fluctuations in currencies against the U.S. dollar will negatively impact our results of operations. We are exposed to foreign currency exchange rate risk as a result of remeasurement and translation of the assets and liabilities of our properties in the United Kingdom and Canada, and our joint venture in Australia, into U.S. dollars. Fluctuations in foreign currency exchange rates can therefore create volatility in our results of operations and may adversely affect our financial condition.

At September 30, 2025 and December 31, 2024, our shareholder's equity included $1.0 billion and $672.3 million from our investments and operations in the United Kingdom, Canada, and Australia which collectively represented 14.2% and 9.3% of total shareholder's equity, respectively. Based on our sensitivity analysis, a 10.0% strengthening of the U.S. dollar against the pound sterling, Canadian dollar, and Australian dollar would have caused a reduction of $103.2 million and $67.2 million to our total shareholder's equity at September 30, 2025 and December 31, 2024, respectively.

Capital Market Risk

We are exposed to risks related to the equity capital markets, and our related ability to raise capital through the issuance of our common stock or other equity instruments. We are also exposed to risks related to the debt capital markets, and our related ability to finance our business through borrowings under other financing arrangements. As a REIT, we are required to distribute a significant portion of our taxable income annually, which constrains our ability to accumulate operating cash flow and therefore requires us to utilize debt or equity capital to finance our business. We seek to mitigate these risks by monitoring the debt and equity capital markets to inform our decisions on the amount, timing and terms of capital we raise.

Evaluation of disclosure controls and procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized, and reported within the specified time periods, and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. An evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period was made under the supervision and with the participation of our management, including our principal executive officer and principal financial officer.

Based upon this evaluation, our principal executive officer and principal financial officer have concluded that, as of September 30, 2025, our disclosure controls and procedures were not effective as of that date due to a material weakness in internal control over financial reporting relating to our risk assessment process, as described below.

Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As described in Part II, Item 9A "Controls and Procedures" of our 2024 Annual Report, as of December 31, 2024, management identified a material weakness because we did not have an effective risk assessment and response process ("risk assessment") that defined clear financial reporting objectives, that identified and evaluated risks of misstatement due to errors over certain financial reporting processes, or that developed internal controls to mitigate those risks.

Remediation of Material Weaknesses

We have invested considerable time and resources to undertake a number of actions related to the material weakness relating to our risk assessment process and we are in the process of developing and implementing additional actions as part of a detailed plan for remediation. The Audit Committee has continued to actively oversee these remediation plans, monitoring plan progression, and ensuring appropriate resources are allocated and implemented to effectively execute management's plan.

While we believe our remediation efforts will improve the effectiveness of our internal control over financial reporting, we cannot assure that the measures will be sufficient to remediate the material weakness we have identified or will prevent potential future material weaknesses. In addition, many of the improvements have not operated for a sufficient period of time to be able to conclude on the effectiveness of relevant internal controls. Accordingly, we will continue to monitor, with oversight from our Board of Directors, and evaluate the effectiveness of our internal control over financial reporting and further enhance our plan for remediation as necessary.

Changes in internal control over financial reporting

Except as discussed in the preceding paragraph, there were no changes in internal control over financial reporting during the three months ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition to the other information set forth in this report, you should carefully consider the risk factors described in Part 1, Item 1A., "Risk Factors," in our 2024 Annual Report and Part II, Item 1A., "Risk Factors," in our Quarterly Report on Form 10-Q for the three months ended March 31, 2025, which could materially affect our business, financial condition, or future results. There have been no material changes to the disclosure on these matters as set forth in such report.