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| SUI > SEC Filings for SUI > Form 8-K on 29-Oct-2012 | All Recent SEC Filings |
29-Oct-2012
Financial Statements and Exhibits
As previously reported in its Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012, on October 22, 2012, Sun Communities, Inc. (the "Company"), has entered into an agreement with PCGRV, LLC and Keith Amigos, Inc., under which the Company has agreed to purchase 100% of the membership interests of a limited liability company that owns a manufactured housing and recreational vehicle community located in Casa Grande, Arizona (the "Arizona Property"). The closing of this acquisition is subject to the consent of the holder of certain debt to be assumed and the satisfaction of customary closing conditions. If these contingencies are satisfied, the Company expects this acquisition to close no later than December 31, 2012.
As previously reported in a Current Report on Form 8-K dated October 3, 2012, as amended, the Company, through a subsidiary, has also entered into (i) a purchase agreement to acquire 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 (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 to two manufactured home communities (collectively, the "Rudgate Managed Properties"). The closing of these transactions is subject to the satisfaction of certain conditions, as described in the Company's Current Report on Form 8-K dated October 3, 2012, as amended. If these conditions are satisfied, the Company expects the transactions to close no later than November 15, 2012.
In accordance with Rule 3-14 and Article 11 of Regulation S-X, the Company hereby files (i) the following financial statement information relating to the pending acquisition of the Arizona Property, and (ii) pro forma financial information to give effect to the acquisition of the Arizona Property, 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.
(a) Financial Statements of Business Acquired
Report of Independent Certified 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
(b) 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.
(d) Exhibits
Exhibit No. Description
23.1 Consent of McGladrey LLP
To the Member
Palm Creek Golf & RV Resort, LLC
Tempe, Arizona
We have audited the accompanying Statement of Revenues and Certain Expenses of Palm Creek Golf & RV Resort, LLC (the "Company") for the year ended December 31, 2011 (the "Historical Summary"). This Historical Summary is the responsibility of the Company's management. Our responsibility is to express an opinion on the Historical Summary 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 Historical Summary is free of material misstatement. An audit includes consideration of internal control over financial reporting 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 Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall Historical Summary presentation. We believe that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 1 and is not intended to be a complete presentation of the Company's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the revenues and certain expenses of the Company for the year ended December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.
/s/ McGladrey LLP
Phoenix, Arizona
October 29, 2012
PALM CREEK GOLF & RV RESORT, LLC
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 $ 6,079 $ 7,878
Ancillary revenues 425 471
Total revenues $ 6,504 $ 8,349
Certain Expenses
Cost of sales, ancillary $ 581 $ 652
Property operating and maintenance 2,358 3,130
Real estate taxes 203 263
Interest expense 715 23
Total certain expenses 3,857 4,068
Revenues in excess of certain expenses $ 2,647 $ 4,281
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See accompanying Notes to the Statements of Revenues and Certain Expenses
PALM CREEK GOLF & RV RESORT, LLC NOTES TO THE 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 Limited Liability Company Interest Assignment Agreement with PCGRV, LLC, and Keith Amigos, Inc. (collectively the "Sellers") to acquire 100% of the membership interest of Palm Creek Golf & RV Resort, LLC ("Palm Creek LLC"), a limited liability company that owns a manufactured housing and recreational vehicle community located in Casa Grande, Arizona (the "Property").
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. 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 do not extend beyond one year and are renewable by mutual agreement from us and the resident.
Golf lot premiums are charged to the first renter who rents a site that is adjacent to the golf course. These premiums are non-refundable, one-time charges and are fully recognized in income at the time the renter occupies the site. In addition, there are other premiums charged for various lot locations.
Use of Estimates
The preparation of the statement of revenues and certain expenses in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of revenues and certain 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.
Subsequent Events
Palm Creek Golf LLC has evaluated subsequent events through October 29, 2012, the date on which the financial statements were available to be issued.
2. Significant Accounting Policies, continued
Minimum Future Lease And Service Agreements
The minimum future cash rents under non-cancellable leases and service
agreements in excess of one year at December 31, 2011 in each of the next four
years are approximately:
Years Ending December 31:
2012 $ 269,000
2013 240,000
2014 111,000
2015 27,000
$ 647,000
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Advertising Expense
Advertising and sales promotion costs are charged to expenses when incurred. Advertising and sales promotion expense was approximately $0.1 million each for the nine months ended September 30, 2012 and the year ended December 31, 2011.
Related Party Transactions
During the year ended December 31, 2011, Palm Creek LLC entered into an agreement with an affiliate that sells recreational vehicles whereby customers who purchase a recreational vehicle from the affiliate will receive reduced rental rates on the space occupied by the recreational vehicle. The affiliate reimburses Palm Creek LLC for the difference of the reduced rate and the standard rates for similar spaces, up to the amount of profit the affiliate recognized on the sale of the recreational vehicle. For each of the nine months ended September 30, 2012 and the year ended December 31, 2012 Palm Creek LLC recognized approximately $0.1 million in rental revenue reimbursement in the accompanying statement of revenue and certain expenses. If a sales customer does not renew their lot in the subsequent year, the affiliate is not obligated to reimburse Palm Creek LLC for subsequent rent payments.
In October 2012, the Company, through a subsidiary, has entered into an
agreement with PCGRV, LLC and Keith Amigos, Inc., under which the Company has
agreed to purchase 100% of the membership interests of a limited liability
company that owns a manufactured housing and recreational vehicle community
located in Casa Grande, Arizona (the "Arizona Property"). The closing of this
acquisition is subject to the consent of the holder of certain debt to be
assumed and the satisfaction of customary closing conditions. If these
contingencies are satisfied, the Company expects this acquisition to close no
later than December 31, 2012.
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. The closing of
these transactions is subject to the satisfaction of certain conditions, as
described in the Company's Current Report on Form 8-K dated October 3, 2012, as
amended. If these conditions are satisfied, the Company expects the transactions
to close no later than November 15, 2012.
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 Arizona Property,
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 Arizona Property, 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 $ 220,375 $ 1,498,502
Cash and cash equivalents 38,724 (38,724 ) -
Inventory of manufactured
homes 5,672 4,415 10,087
Notes and other receivables 128,178 3,980 132,158
Other assets 50,525 7,434 57,959
TOTAL ASSETS $ 1,501,226 $ 197,480 $ 1,698,706
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LIABILITIES Debt $ 1,268,672 $ 125,300 (C) $ 1,393,972 Lines of credit 2,988 72,180 (C) 75,168 Other liabilities 76,749 - 76,749 TOTAL LIABILITIES $ 1,348,409 $ 197,480 $ 1,545,889 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 $ 197,480 $ 1,698,706 |
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 & Arizona
September 30, 2012 (D) Rainbow (E) Property (E) Adjustments September 30, 2012
REVENUES
Income from real
property $ 188,818 $ 10,407 $ 6,079 - $ 205,304
Revenue from home
sales 31,513 - - - 31,513
Rental home revenue 19,514 - - - 19,514
Ancillary revenues,
net 349 - (156 ) - 193
Interest 7,907 77 - - 7,984
Other income, net 530 15 - - 545
Total revenues 248,631 10,499 5,923 - 265,053
COSTS AND EXPENSES
Property operating
and maintenance 51,261 2,846 2,358 - 56,465
Real estate taxes 14,741 911 203 - 15,855
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 - - (324 ) (F) 1,110
Depreciation and
amortization 63,027 - - 6,200 (G) 69,227
Interest 50,644 510 715 3,319 (H) 55,188
Interest on
mandatorily
redeemable debt 2,499 - - - 2,499
Total expenses 243,094 4,586 3,276 9,195 260,151
Income (loss)
before income taxes
and distributions
from affiliates 5,537 5,913 2,647 (9,195 ) 4,902
Provision for state
income taxes (190 ) - - - (190 )
Distributions from
affiliate 3,250 - - - 3,250
Net income (loss) 8,597 5,913 2,647 (9,195 ) 7,962
Less: Preferred
return to A-1
preferred OP units 1,744 - - - 1,744
Less: Amounts
attributable to
noncontrolling
interests 463 - - 25 (I) 488
Net income (loss)
attributable to Sun
Communities, Inc.
common stockholders $ 6,390 $ 5,913 2,647 $ (9,220 ) $ 5,730
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
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