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SUI > SEC Filings for SUI > Form 8-K/A on 26-Oct-2012All Recent SEC Filings

Show all filings for SUN COMMUNITIES INC

Form 8-K/A for SUN COMMUNITIES INC


26-Oct-2012

Financial Statements and Exhibits


Item 9.01 Financial Statements and Exhibits.

In accordance with Rule 3-14 and Article 11 of Regulation S-X, Sun Communities, Inc. (the "Company") hereby files (i) the following financial statement information relating to the pending acquisition of four manufactured home communities from Rudgate Silver Springs Company, L.L.C., Rudgate West Company Limited Partnership, Rudgate East Company Limited Partnership, Rudgate East Company II Limited Partnership and Rudgate Hunters Crossing, LLC (collectively, the "Rudgate Acquisition Properties"), and financing and management agreement arrangements with Rudgate Village Company Limited Partnership, Rudgate Clinton Company Limited Partnership and Rudgate Clinton Estates L.L.C with respect to two manufactured home communities (collectively, the "Rudgate Managed Properties"), and (ii) and pro forma financial information of the Company to give effect to the transactions involving the Rudgate Acquisition Properties and the Rudgate Managed Properties and the Company's October 22, 2012 acquisition of Rainbow RV Resort. As these properties will be directly or indirectly owned or managed by entities that will elect or have elected to be treated as real estate investment trusts (as specified under sections 856-860 of the Internal Revenue Code of 1986) for Federal income tax purposes, a presentation of estimated taxable operating results is not applicable.

The closing of the transactions involving the Rudgate Acquisition Properties and the Rudgate Managed Properties is subject to the satisfaction of certain conditions, as described in the Current Report on Form 8-K to which this Amendment relates. If these conditions are satisfied, the Company expects the transactions to close no later than November 15, 2012.

(a) Financial Statements of Business Acquired

Report of Independent Registered Public Accounting Firm Statements of Revenue and Certain Expenses for the nine months ended September 30, 2012 (unaudited) and the year ended December 31, 2011 Notes to Statements of Revenues and Certain Expenses Unaudited Pro Forma Financial Information Unaudited Pro Forma Condensed Balance Sheet of Sun Communities, Inc. as of September 30, 2012
Unaudited Pro Forma Condensed Consolidated Statement of Operations of Sun Communities, Inc. for the nine months ended September 30, 2012 Unaudited Pro Forma Condensed Consolidated Statement of Operations of Sun Communities, Inc. for the year ended December 31, 2011 Notes to Pro Forma Condensed Consolidated Financial Statements of Sun Communities, Inc.

(b) Exhibits

Exhibit No. Description

   10.1*     Contribution Agreement dated October 3, 2012, among Sun Communities
             Operating Limited Partnership, Rudgate Silver Springs Company,
             L.L.C., Rudgate West Company Limited Partnership, Rudgate East
             Company Limited Partnership, Rudgate East Company II Limited
             Partnership and Rudgate Hunters Crossing, LLC
   10.2*     Loan commitment letter dated October 3, 2012, among Sun Rudgate
             Lender LLC, Rudgate Village Company Limited Partnership, Rudgate
             Clinton Company Limited Partnership and Rudgate Clinton Estates
             L.L.C and certain guarantors named therein
   23.1**    Consent of Grant Thornton LLP
   99.1*     Press release dated October 9, 2012



* Previously filed as exhibits to the Current Report on Form 8-K filed with Securities and Exchange Commission on October 9, 2011. ** Filed herewith


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Sun Communities, Inc.

We have audited the accompanying combined statement of revenues and certain expenses (the "Statement") of Rudgate Communities (the "Communities") for the year ended December 31, 2011. This Statement is the responsibility of Sun Communities, Inc. and the Communities' managements. Our responsibility is to express an opinion on the Statement based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Statement is free of material misstatement. An audit includes consideration of internal control over financial reporting as it relates to the Statement as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Communities' internal control over financial reporting as it relates to the Statement. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Statement. We believe that our audit provides a reasonable basis for our opinion.

The accompanying Statement was prepared for the purpose of complying with the rules and regulations of the United States Securities and Exchange Commission (for inclusion in this Form 8-K/A of Sun Communities, Inc.) as discussed in Note 1 to the Statement and is not intended to be a complete presentation of the Communities' revenues and expenses.

In our opinion, the Statement presents fairly, in all material respects, the revenues and certain expenses discussed in Note 1 to the Statement for the year ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

/S/ Grant Thornton LLP

Southfield, Michigan

October 26, 2012


                              RUDGATE COMMUNITIES
              COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
      FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 (unaudited) AND FOR THE
                          YEAR ENDED DECEMBER 31, 2011
                                 (In thousands)

                                           (Unaudited)
                                        Nine Months Ended          Year Ended
                                        September 30, 2012     December 31, 2011

Revenues
Revenues                               $            10,038    $            15,531
Interest income                                         77                    168
Total revenues                         $            10,115    $            15,699

Certain Expenses
Property operating and maintenance     $             2,393    $             3,451
Real estate taxes                                      836                  1,366
General and administrative expenses                    319                    656
Interest expense                                       510                    857
Total certain expenses                               4,058                  6,330

Revenues in excess of certain expenses $             6,057    $             9,369

See accompanying Notes to the Combined Statements of Revenues and Certain Expenses


RUDGATE COMMUNITIES
NOTES TO THE COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 (unaudited)
AND FOR THE YEAR ENDED DECEMBER 31, 2011

1. Basis of Presentation

In October 2012, Sun Communities, Inc. (the "Company"), entered into a Contribution Agreement with Rudgate Silver Springs, L.L.C., Rudgate West Company Limited Partnership, Rudgate East Company Limited Partnership, Rudgate East Company II Limited Partnership and Rudgate Hunters Crossing, LLC (collectively, the "Sellers") to acquire four manufactured home communities. The Company also entered into a commitment letter with Rudgate Village Company Limited Partnership, Rudgate Clinton Company Limited Partnership and Rudgate Clinton Estates L.L.C. (collectively, the "Borrowers") and certain guarantors in which Sun Rudgate Lender LLC will make a mezzanine loan to the Borrowers of the two manufactured home communities.

The statements of revenues and certain expenses (the "Historical Summaries" or "Historical Summary") have been prepared for the purpose of complying with the provision of Article 3-14 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the "SEC"), which requires certain information with respect to real estate operations to be included in certain filings with the SEC. The Historical Summary for the year ended December 31, 2011 is audited and includes the historical revenues and certain operating expenses of the Property, exclusive of items which may not be comparable to the proposed future operations of the Property. Certain properties historical revenues and certain operating expenses are based on a March 31, 2012 fiscal year. These have been combined as in compliance with Rule 3A-02 of Regulation S-X. Material amounts that would not be directly attributable to future operating results of the Property are excluded, and the Historical Summaries are not intended to be a complete presentation of the Property's revenues and expenses. Items excluded consist of depreciation and amortization expense and corporate general and administrative expenses. In the opinion of management, the accompanying interim statement of revenues and certain expenses reflects all adjustments of a normal and recurring nature that are considered necessary for a fair presentation of the results for the interim period presented. Actual results could differ materially from the estimates in the near term, and the operating results for the interim period are not indicative of results for the year ending December 31, 2012.

2. Significant Accounting Policies

Revenue Recognition

Rental income attributable to sites is recorded on a straight-line basis when earned from tenants. Leases entered into by tenants generally range from month-to-month to two years and are renewable by mutual agreement from us and the resident. Interest income on notes receivable is recorded on a level yield basis over the life of the notes.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions related to the reported amounts that affect the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates.

Commitments and Contingencies

In connection with the ownership and operation of the Property, the Company may be potentially liable for costs and damages related to environmental matters. The Company has not been notified by any governmental authority of any non-compliance, liability or other claim related to the Property, and the Company is not aware of any other environmental condition that it believes will have a material adverse effect on the Property's revenues and certain expenses.


SUN COMMUNITIES, INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
In October 2012, the Company entered into a pending (i) acquisition of four manufactured home communities from Rudgate Silver Springs Company, L.L.C., Rudgate West Company Limited Partnership, Rudgate East Company Limited Partnership, Rudgate East Company II Limited Partnership and Rudgate Hunters Crossing, LLC, and (ii) financing and management agreement arrangements with Rudgate Village Company Limited Partnership, Rudgate Clinton Company Limited Partnership and Rudgate Clinton Estates L.L.C with respect of two manufactured home communities (collectively "Rudgate"). The communities acquired are located in Michigan and comprise approximately 3,600 developed sites.
In October 2012, the Company acquired Rainbow RV Resort ("Rainbow"), a Florida recreational vehicle community comprising approximately 500 developed sites. The following unaudited pro forma condensed consolidated balance sheet as of September 30, 2012 is presented as if the Company acquired Rudgate and Rainbow on September 30, 2012. The following unaudited pro forma condensed consolidated statements of operations for the nine months ended September 30, 2012 and for the year ended December 31, 2011 are presented as if the Company had acquired Rudgate and Rainbow on January 1, 2011. This unaudited pro forma condensed consolidated financial information should be read in conjunction with the historical financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2011, and the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2012 and are not necessarily indicative of what the actual financial position or results of operations would have been had the Company completed the transaction as of the beginning of the periods presented, nor is it necessarily indicative of future results. In the opinion of the Company's management, the pro forma financial statements include all significant necessary adjustments that can be factually supported to reflect the effects of the acquisitions.


                             SUN COMMUNITIES, INC.
            UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                            AS OF SEPTEMBER 30, 2012
                                 (In thousands)


                                  (Unaudited)              Pro Forma              Pro Forma
                             September 30, 2012 (A)     Adjustments (B)       September 30, 2012
ASSETS
Investment property, net    $           1,278,127      $       132,375       $        1,410,502
Cash and cash equivalents                  38,724              (38,724 )                      -
Inventory of manufactured
homes                                       5,672                2,700                    8,372
Notes and other receivables               128,178                3,980                  132,158
Other assets                               50,525                7,434                   57,959
TOTAL ASSETS                $           1,501,226      $       107,765       $        1,608,991

LIABILITIES
Debt                        $           1,268,672      $        83,300   (C) $        1,351,972
Lines of credit                             2,988               24,465   (C)             27,453
Other liabilities                          76,749                    -                   76,749
TOTAL LIABILITIES           $           1,348,409      $       107,765       $        1,456,174

Commitments and
contingencies

STOCKHOLDERS' DEFICIT
Preferred stock                                 -                    -                        -
Common stock                                  315                    -                      315
Additional paid-in capital                857,809                    -                  857,809
Accumulated other
comprehensive loss                           (696 )                  -                     (696 )
Distributions in excess of
accumulated earnings                     (663,579 )                  -                 (663,579 )
Treasury stock                            (63,600 )                  -                  (63,600 )
Total Sun Communities, Inc.
stockholders' deficit                     130,249                    -                  130,249
Noncontrolling interests:
   A-1 preferred OP units                  45,548                    -                   45,548
   Common OP units                        (22,980 )                  -                  (22,980 )
TOTAL STOCKHOLDERS' DEFICIT               152,817                    -                  152,817
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT       $           1,501,226      $       107,765       $        1,608,991

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements


                             SUN COMMUNITIES, INC.
       UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012
                     (In thousands, except per share data)
                                                                                               Pro Forma
                             Nine Months Ended                           Pro Forma         Nine Months Ended
                                                       Rudgate &
                          September 30, 2012 (D)      Rainbow (E)       Adjustments        September 30, 2012
REVENUES
Income from real
property                 $               188,818     $     10,407     $           -       $          199,225
Revenue from home sales                   31,513                -                 -                   31,513
Rental home revenue                       19,514                -                 -                   19,514
Ancillary revenues, net                      349                -                 -                      349
Interest                                   7,907               77                 -                    7,984
Other income, net                            530               15                 -                      545
Total revenues                           248,631           10,499                 -                  259,130

COSTS AND EXPENSES
Property operating and
maintenance                               51,261            2,846                 -                   54,107
Real estate taxes                         14,741              911                 -                   15,652
Cost of home sales                        24,535                -                 -                   24,535
Rental home operating
and maintenance                           13,090                -                 -                   13,090
General and
administrative - real
property                                  15,405              319                 -                   15,724
General and
administrative - home
sales and rentals                          6,458                -                 -                    6,458
Acquisition related
costs                                      1,434                -              (301 ) (F)              1,133
Depreciation and
amortization                              63,027                -             3,756   (G)             66,783
Interest                                  50,644              510             2,932   (H)             54,086
Interest on mandatorily
redeemable debt                            2,499                -                 -                    2,499
Total expenses                           243,094            4,586             6,387                  254,067

Income (loss) before
income taxes and
distributions from
affiliates                                 5,537            5,913            (6,387 )                  5,063
Provision for state
income taxes                                (190 )              -                 -                     (190 )
Distributions from
affiliate                                  3,250                -                 -                    3,250
Net income (loss)                          8,597            5,913            (6,387 )                  8,123
Less: Preferred return
to A-1 preferred OP
units                                      1,744                -                 -                    1,744
Less: Amounts
attributable to
noncontrolling interests                     463                -               189   (I)                652
Net income (loss)
attributable to Sun
Communities, Inc. common
stockholders             $                 6,390     $      5,913     $      (6,576 )     $            5,727

Weighted average common
shares outstanding:
Basic                                     26,427                                                      26,427
Diluted                                   26,444                                                      26,444

Earnings (loss) per
share:
Basic                    $                  0.24                                          $             0.22
Diluted                  $                  0.24                                          $             0.22

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements


                             SUN COMMUNITIES, INC.
       UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2011
                     (In thousands, except per share data)
                                                                                             Pro Forma
                         Twelve Months Ended                          Pro Forma         Twelve Months Ended
                                                    Rudgate &
                        December 31, 2011 (D)      Rainbow (E)       Adjustments         December 31, 2011
REVENUES
Income from real
property               $              223,613     $     16,700     $           -       $           240,313
Revenue from home
sales                                  32,252                -                 -                    32,252
Rental home revenue                    22,290                -                 -                    22,290
Ancillary revenues,
net                                       592                -                 -                       592
Interest                                9,509              168                 -                     9,677
Other income, net                         929               27                 -                       956
Total revenues                        289,185           16,895                 -                   306,080

COSTS AND EXPENSES
Property operating and
maintenance                            59,190            4,053                 -                    63,243
Real estate taxes                      17,547            1,466                 -                    19,013
Cost of home sales                     25,392                -                 -                    25,392
Rental home operating
and maintenance                        16,196                -                 -                    16,196
General and
administrative - real
property                               19,704              656                 -                    20,360
General and
administrative - home
sales and rentals                       8,156                -                 -                     8,156
Acquisition related
costs                                   1,971                -                 -                     1,971
Depreciation and
amortization                           74,193                -             5,008   (G)              79,201
Asset impairment
charge                                  1,382                -                 -                     1,382
Interest                               64,606              857             3,909   (H)              69,372
Interest on
mandatorily redeemable
debt                                    3,333                -                 -                     3,333
Total expenses                        291,670            7,032             8,917                   307,619

Income (loss) before
income taxes and
distributions from
affiliates                             (2,485 )          9,863            (8,917 )                  (1,539 )
Provision for state
income taxes                             (150 )              -                 -                      (150 )
Distributions from
affiliate                               2,100                -                 -                     2,100
Net income (loss)                        (535 )          9,863            (8,917 )                     411
Less: Preferred return
to A-1 preferred OP
units                                   1,222                -                 -                     1,222
Less: Amounts
attributable to
noncontrolling
interests                                (671 )              -               286   (I)                (385 )
Net income (loss)
attributable to Sun
Communities, Inc.
common stockholders    $               (1,086 )   $      9,863     $      (9,203 )     $              (426 )

Weighted average
common shares
outstanding:
Basic                                  21,147                                                       21,147
Diluted                                21,147                                                       21,147

Earnings (loss) per
share:
Basic                  $                (0.05 )                                        $             (0.02 )
Diluted                $                (0.05 )                                        $             (0.02 )

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