Sun Communities, Inc. Reports 2020 Fourth Quarter Results and 2021 Guidance
Southfield, MI, Feb. 17, 2021 (GLOBE NEWSWIRE) — Sun Communities, Inc. (NYSE: SUI) (the “Company”), a real estate investment trust (“REIT”) that owns and operates, or has an interest in, manufactured housing (“MH”) communities, recreational vehicle (“RV”) resorts and marinas, (collectively, the “properties”), today reported its fourth quarter results for 2020.Financial Results for the Quarter and Year Ended December 31, 2020For the quarter ended December 31, 2020, total revenues increased $82.4 million, or 27.3 percent, to approximately $384.3 million compared to $301.8 million for the same period in 2019. Net income attributable to common stockholders was approximately $7.6 million, or $0.07 per diluted common share, for the quarter ended December 31, 2020.For the year ended December 31, 2020, total revenues increased $134.3 million, or 10.6 percent, to approximately $1.4 billion compared to $1.3 billion for the same period in 2019. Net income attributable to common stockholders was $131.6 million, or $1.34 per diluted common share, for the year ended December 31, 2020.Non-GAAP Financial Measures and Portfolio PerformanceCore Funds from Operations (“Core FFO”)(1) for the quarter ended December 31, 2020, was $1.16 per diluted share and OP unit (“Share”) as compared to $1.10 in the corresponding period in 2019, a 5.5 percent increase. Core FFO(1) for the year ended December 31, 2020, was $5.09 per Share as compared to $4.92 in the prior year, an increase of 3.5 percent.
Same Community(2) Net Operating Income (“NOI”)(1) increased by 2.1 percent and 4.0 percent for the quarter and year ended December 31, 2020, respectively, as compared to the corresponding periods in 2019.
Acquired approximately $3.0 billion of operating properties including the $2.1 billion acquisition of Safe Harbor Marinas in 2020.
MH and Annual RV Revenue Producing Sites increased by 578 sites in the fourth quarter and 2,505 sites during the year ended December 31, 2020, bringing total portfolio occupancy to 97.3 percent.
MH and Annual RV Rent Collections for the fourth quarter were over 96.0 percent and 97.0 percent, respectively.Gary Shiffman, Chief Executive Officer stated, “As we reflect on the events of 2020, we are pleased with our performance and the demonstrated resilience and stability of our business and operating platform, particularly in light of the challenging environment. We generated 4.0 percent same community NOI growth, delivered 3.5 percent year over year Core FFO(1) per Share growth, deployed $3.0 billion into accretive acquisitions and raised approximately $1.9 billion in two equity offerings with strong investor demand. We are well positioned to continue delivering industry leading growth and have a new business line that broadens our opportunity set with the addition of Safe Harbor Marinas.”Mr. Shiffman continued, “The dedication and perseverance of our team to create value for our shareholders continues to be a key factor in our success.”
OPERATING HIGHLIGHTSPortfolio OccupancyTotal MH and annual RV occupancy was 97.3 percent at December 31, 2020, compared to 96.4 percent at December 31, 2019, an increase of 90 basis points.During the quarter ended December 31, 2020, MH and annual RV revenue producing sites increased by 578 sites, bringing full year 2020 revenue producing site gains to 2,505 sites.
Same Community(2) ResultsFor the 367 MH and RV properties owned and operated by the Company since January 1, 2019, NOI(1) for the quarter ended December 31, 2020 increased 2.1 percent over the same period in 2019, resulting from a 5.7 percent increase in revenues and a 13.6 percent increase in expenses. Adjusted to remove the impact of $0.3 million of direct COVID-19 related health and safety expense, Same Community NOI(1) growth was 2.4 percent for the quarter ended December 31, 2020. Payroll, utilities and supplies and repair costs were elevated during the quarter primarily due to the extended season of the Company’s northern RV resorts. Same Community occupancy(3) increased to 98.8 percent at December 31, 2020 from 97.0 percent at December 31, 2019.For the year ended December 31, 2020, NOI(1) increased 4.0 percent over the same period in 2019, resulting from a 3.6 percent increase in revenues and a 3.0 percent increase in expenses. Adjusted to remove the impact of $2.4 million of direct COVID-19 related health and safety expense, Same Community NOI(1) growth was 4.4 percent for the year ended December 31, 2020.
Home SalesDuring the quarter ended December 31, 2020, the Company sold 782 homes as compared to 808 homes in the same period in 2019. The Company sold 156 and 140 new homes for the quarters ended December 31, 2020 and 2019, respectively, an increase of 11.4 percent. Pre-owned home sales were 626 in the fourth quarter 2020 as compared to 668 in the same period in 2019. Rental home sales, which are included in total pre-owned home sales, were 269 and 281 for the quarters ended December 31, 2020 and 2019, respectively.During the year ended December 31, 2020, the Company sold 2,866 homes as compared to 3,439 homes sold during 2019. The Company sold 570 and 571 new homes during the years ended December 31, 2020 and 2019, respectively. Pre-owned home sales were 2,296 during the year ended December 31, 2020, as compared to 2,868 during 2019. Rental home sales, which are included in total pre-owned home sales, were 850 and 1,140 for the years ended December 31, 2020 and 2019, respectively.Rent CollectionsFor the fourth quarter of 2020, MH and annual RV rent collections were over 96.0 percent and 97.0 percent, respectively, after adjusting for the impact of COVID-19 related hardship deferrals and prepaid rent balances.January 2021 rent collections were 97.0 percent for MH and 97.0 percent for annual RV.
PORTFOLIO ACTIVITYAcquisitionsDuring and subsequent to the quarter ended December 31, 2020, the Company acquired the following communities and resorts:(a) Includes six MH communities.(b) Includes two RV resorts.During and subsequent to the quarter ended December 31, 2020, the Company acquired the following marinas:(a) Includes 99 owned marinas located in 22 states. In conjunction with the acquisition, the Company issued Series H preferred OP units. As of December 31, 2020, 581,407 Series H preferred OP units were outstanding.(b) Acquired in connection with Safe Harbor Marinas acquisition. Transfer of the marinas was contingent on receiving third party consents.(c) Includes two marinas. In conjunction with the acquisition, the Company issued Series I preferred OP units. As of December 31, 2020, 922,000 Series I preferred OP units were outstanding.(d) Includes two marinas.During the year ended December 31, 2020, the Company acquired 24 MH communities and RV resorts with 6,919 sites and 106 marinas with over 38,800 wet slips and dry rack storage spaces for a total purchase price of approximately $3.0 billion.Construction ActivityDuring the quarter ended December 31, 2020, the Company completed the construction of nearly 50 sites in two ground-up developments and one redevelopment property, and over 120 expansion sites in one RV resort and one MH community. Full-year ground-up and redevelopment site deliveries were over 1,000 sites in five properties and over 300 total expansion sites in eight properties.
BALANCE SHEET, CAPITAL MARKETS ACTIVITY AND OTHER ITEMSDebt TransactionsAs of December 31, 2020, the Company had approximately $4.8 billion of debt outstanding. The weighted average interest rate was 3.4 percent and the weighted average maturity was 9.4 years. The Company had $83.0 million of unrestricted cash on hand. At December 31, 2020, the Company’s net debt to trailing twelve-month Recurring EBITDA(1) ratio was 6.9 times, which includes all of Safe Harbor’s debt, but only two months of its EBITDA contribution.During the quarter ended December 31, 2020, as previously disclosed, the Company entered into a new $260.0 million term loan secured by 11 MH and RV properties. The loan has a 12-year maturity and a fixed interest rate of 2.64 percent.Equity TransactionsDuring the quarter ended December 31, 2020, as previously disclosed, the Company closed an underwritten registered public offering of 9,200,000 shares of common stock. Proceeds from the offering were $1.2 billion after deducting expenses related to the offering. The Company used the net proceeds of the offering to fund the cash portion of the acquisition of Safe Harbor and for working capital and general corporate purposes.2021 DistributionsThe Company’s Board of Directors has approved setting the 2021 annual distribution rate at $3.32 per common share, an increase of $0.16, or 5.1 percent, over the current $3.16 per common share for 2020. This increase will begin with the first quarter distribution to be paid in April 2021. While the Board of Directors has adopted the new annual distribution policy, the amount of each quarterly distribution on the Company’s common stock will be subject to approval by the Board of Directors.New DirectorOn February 11, 2020 the Board of Directors increased the size of the board from seven to eight directors and appointed Tonya Allen to the Company’s Board of Directors as an independent director. Ms. Allen brings an expert perspective on sustainability and social issues, an important focus for the Company.
2021 GUIDANCEThe estimates and assumptions presented below represent a range of possible outcomes and may differ materially from actual results. These estimates include contributions from all acquisitions through the date of this release and exclude prospective acquisitions and capital markets activity. The estimates and assumptions are forward-looking based on the Company’s current assessment of economic and market conditions, as well as other risks outlined below under the caption Cautionary Statement Regarding Forward-Looking Statements.Notes to 2021 guidance:Includes contributions from recently completed acquisitions$218.5 million of MH community and RV resort acquisitions in the fourth quarter 2020 and subsequent to year end$437.3 million of marina acquisitions subsequent to the closing of the Safe Harbor transaction on October 30, 2020Includes a lower transient RV revenue estimate of $8.0 – $10.0 million in the first quarter 2021 due to the extension of the Canadian border closure order and the California travel restrictions imposed through early February, 2021Earnings and Core FFO(1)
(i) Certain securities that are dilutive to the computation of Core FFO(1) per fully diluted share in the table above have been excluded from the computation of net income per fully diluted share, as inclusion of these securities would have been anti-dilutive to net income per fully diluted share.Total MH and RV PortfolioNumber of properties: 446
General and Administrative ExpensesGeneral and administrative expenses include the impact of the Company’s entry into the marina asset class. The marina portfolio is operated as an independent wholly-owned subsidiary retaining its own senior management, property management and back office operations. As significant growth potential through the consolidation of the highly fragmented marina industry is anticipated, costs associated with scaling to effectively operate a larger portfolio are required. As a general practice, marina acquisitions are underwritten with an expected incremental general and administrative cost of 3.0 percent of revenues.Same Community(2) PortfolioNumber of MH and RV properties: 407Same community NOI(1) growth is expected to be between 5.6 percent and 6.6 percent for full year 2021.MarinasNOI(1) inclusive of the contribution from service and ancillary operations is expected to be $163.0 million – $169.0 million.EARNINGS CONFERENCE CALLA conference call to discuss fourth quarter operating results will be held on Thursday, February 18, 2021 at 11:00 A.M. (ET). To participate, call toll-free 877-407-9039. Callers outside the U.S. or Canada can access the call at 201-689-8470. A replay will be available following the call through March 4, 2021 and can be accessed toll-free by calling 844-512-2921 or 412-317-6671. The Conference ID number for the call and the replay is 13713712. The conference call will be available live on Sun Communities’ website located at www.suncommunities.com. The replay will also be available on the website.Sun Communities, Inc. is a REIT that, as of December 31, 2020, owned, operated, or had an interest in a portfolio of 552 developed MH, RV and marina properties comprising over 188,000 developed sites in 39 states and Ontario, Canada.For more information about Sun Communities, Inc., please visit www.suncommunities.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTSThis press release contains various “forward-looking statements” within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the Company intends that such forward-looking statements will be subject to the safe harbors created thereby. For this purpose, any statements contained in this press release 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,” “intends,” “intend,” “intended,” “goal,” “estimate,” “estimates,” “expects,” “expect,” “expected,” “project,” “projected,” “projections,” “plans,” “predicts,” “potential,” “seeks,” “anticipates,” “anticipated,” “should,” “could,” “may,” “will,” “designed to,” “foreseeable future,” “believe,” “believes,” “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 the Company’s 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 or incorporated herein, some of which are beyond the Company’s control. These risks, uncertainties and other factors may cause the Company’s 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” contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and September 30, 2020, and the Company’s other filings with the Securities and Exchange Commission from time to time, such risks, uncertainties and other factors include but are not limited to:outbreaks of disease, including the COVID-19 pandemic, and related stay at home orders, quarantine policies and restrictions on travel, trade and business operations;changes in general economic conditions, the real estate industry and the markets in which the Company operates;difficulties in the Company’s ability to evaluate, finance, complete and integrate acquisitions, developments and expansions successfully;the Company’s liquidity and refinancing demands;the Company’s ability to obtain or refinance maturing debt;the Company’s ability to maintain compliance with covenants contained in its debt facilities;availability of capital;changes in foreign currency exchange rates, including between the U.S. dollar and each of the Canadian and Australian dollars;the Company’s ability to maintain rental rates and occupancy levels;the Company’s ability to maintain effective internal control over financial reporting and disclosure controls and procedures;increases in interest rates and operating costs, including insurance premiums and real property taxes;risks related to natural disasters such as hurricanes, earthquakes, floods, and wildfires;general volatility of the capital markets and the market price of shares of the Company’s capital stock;the Company’s ability to maintain its status as a REIT;changes in real estate and zoning laws and regulations;legislative or regulatory changes, including changes to laws governing the taxation of REITs;litigation, judgments or settlements;competitive market forces;the ability of purchasers of manufactured homes and boats to obtain financing; andthe level of repossessions by manufactured home and boat lenders.Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements included in this press release, whether as a result of new information, future events, changes in its expectations or otherwise, except as required by law.Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. All written and oral forward-looking statements attributable to the Company or persons acting on its behalf are qualified in their entirety by these cautionary statement.
Investor Information
Portfolio Overview
(As of December 31, 2020)
Financial and Operating Highlights
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Consolidated Balance Sheets
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Statements of Operations – Quarter to Date and Year to Date Comparison
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N/M = Percentage change is not meaningful.
Outstanding Securities and Capitalization
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^ Annual distribution is based on the last quarterly distribution annualized.(1) Calculation may yield minor differences due to fractional shares paid in cash to the stockholder at conversion.
Reconciliations to Non-GAAP Financial Measures
Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to FFO(1)
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(a) Adjustments include deferred compensation amortization upon retirement and deferred tax (benefit) / expense.
Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to Recurring EBITDA(1)
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Reconciliation of Net Income Attributable to Sun Communities, Inc. Common Stockholders to NOI(1)
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Non-GAAP and Other Financial Measures
Debt Analysis
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Real Property Operations – Same Community(2)
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(a) Includes COVID-19 personal protective equipment expense of $0.3 million and $2.4 million for the quarter and year ended December 31, 2020, respectively.Home Sales Summary
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Rental Program Summary
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Acquisitions and Other Summary(14)
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Capital Improvements, Development, and Acquisitions
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(a) Includes capital improvements at recently acquired marinas, recurring capital expenditures, revenue producing capital expenditures and expansion and development.
Operating Statistics for MH and Annual RVs
Footnotes and Definitions Investors in and analysts following the real estate industry utilize funds from operations (“FFO”), net operating income (“NOI”), and earnings before interest, tax, depreciation and amortization (“EBITDA”) as supplemental performance measures. The Company believes that FFO, NOI, and EBITDA are appropriate measures given their wide use by and relevance to investors and analysts. Additionally, FFO, NOI, and EBITDA are commonly used in various ratios, pricing multiples, yields and returns and valuation calculations used to measure financial position, performance and value.FFO, reflecting the assumption that real estate values rise or fall with market conditions, principally adjusts for the effects of generally accepted accounting principles (“GAAP”) depreciation and amortization of real estate assets.NOI provides a measure of rental operations that does not factor in depreciation, amortization and non-property specific expenses such as general and administrative expenses.EBITDA provides a further measure to evaluate ability to incur and service debt and to fund dividends and other cash needs.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 depreciable operating property, plus real estate related depreciation and amortization, real estate related impairments, 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 the Company’s operating performance. By excluding gains and losses related to sales of previously depreciated operating real estate assets, impairment and excluding real estate asset depreciation and amortization (which can vary among owners of identical assets in similar condition based on historical cost accounting and useful life estimates), FFO provides a performance measure that, when compared 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. The Company also uses FFO excluding certain gain and loss items that management considers unrelated to the operational and financial performance of our core business (“Core FFO”). The Company believes that Core FFO provides enhanced comparability for investor evaluations of period-over-period results.The Company believes 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 performance measure or GAAP cash flow from operations as a liquidity measure. 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. Further, 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 the Company’s interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that interpret the NAREIT definition differently.NOI is derived from revenues minus property operating expenses and real estate taxes. NOI is a non-GAAP financial measure that the Company believes 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. The Company uses 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 the properties of the Company rather than of the Company overall.The Company believes 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 the Company’s financial performance or GAAP cash flow from operating activities as a measure of the Company’s liquidity; nor is it indicative of funds available for the Company’s cash needs, including its ability to make cash distributions. 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.EBITDA as defined by NAREIT (referred to as “EBITDAre”) is calculated as GAAP net income (loss), plus interest expense, plus income tax expense, plus depreciation and amortization, plus or minus losses or gains on the disposition of depreciated property (including losses or gains on change of control), plus impairment write-downs of depreciated property and of investments in nonconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate, and adjustments to reflect the entity’s share of EBITDAre of nonconsolidated affiliates. EBITDAre is a non-GAAP financial measure that the Company uses to evaluate its ability to incur and service debt, fund dividends and other cash needs and cover fixed costs. Investors utilize EBITDAre as a supplemental measure to evaluate and compare investment quality and enterprise value of REITs. The Company also uses EBITDAre excluding certain gain and loss items that management considers unrelated to measurement of the Company’s performance on a basis that is independent of capital structure (“Recurring EBITDA”).The Company believes that GAAP net income (loss) is the most directly comparable measure to EBITDAre. EBITDAre is not intended to be used as a measure of the Company’s cash generated by operations or its dividend-paying capacity, and should therefore not replace GAAP net income (loss) as an indication of the Company’s financial performance or GAAP cash flow from operating, investing and financing activities as measures of liquidity.(2) Same Community results reflect constant currency for comparative purposes. Canadian currency figures in the prior comparative period have been translated at 2020 average exchange rates.(3) The Same Community occupancy percentage is 97.4 percent for MH, 100.0 percent for RV, and 98.0 percent for the blended MH and RV. The MH and RV blended occupancy is derived from 112,134 developed sites, of which 109,882 were occupied. The Same Community occupancy percentage for 2019 has been adjusted to reflect incremental period-over-period growth from filled expansion sites and the conversion of transient RV sites to annual RV sites. The adjusted Same Community occupancy percentage for 2020 is derived from 111,196 developed sites, of which 109,882 were occupied. The number of developed sites excludes RV transient sites and approximately 950 recently completed but vacant MH expansion sites.(4) The effect of certain anti-dilutive convertible securities is excluded from these items.(5) Net leased sites do not include occupied sites acquired during that year.(6) Lines of credit and other debt includes the Company’s MH floor plan facility. The effective interest rate on the MH floor plan facility was 6.0 percent for the quarters ended December 31, September 30 and June 30, 2020, and 7.0 percent for the quarters ended March 31, 2020, and December 31, 2019. However, the Company pays no interest if the floor plan balance is repaid within 60 days.(7) Other expense, net was as follows (in thousands):(8) These costs represent the expenses incurred to bring recently acquired properties up to the Company’s operating standards, including items such as tree trimming and painting costs that do not meet the Company’s capitalization policy.(9) The renter’s monthly payment includes the site rent and an amount attributable to the home lease. The site rent is reflected in Real Property Operations’ segment revenue. For purposes of management analysis, site rent is included in Rental Program revenue to evaluate the incremental revenue gains associated with the Rental Program, and to assess the overall growth and performance of the Rental Program and financial impact on the Company’s operations.(10) Same Community results net $9.3 million and $8.7 million of certain utility revenue against the related utility expense in property operating and maintenance expense for the three months ended December 31, 2020 and 2019, respectively. Same Community results net $37.7 million and $34.7 million of utility revenue against the related utility expense in property operating and maintenance expense for the years ended December 31, 2020 and 2019, respectively.(11) Same Community supplies and repair expense excludes $0.1 million and $0.7 million for the three months and year ended December 31, 2019, of expenses incurred for recently acquired properties to bring the properties up to the Company’s operating standards, including items such as tree trimming and painting costs that do not meet the Company’s capitalization policy.(12) Monthly base rent per site pertains to annual RV sites and excludes transient RV sites.(13) Calculated using actual results without rounding.(14) Acquisitions and other is comprised of 130 properties acquired and three properties that the Company has an interest in, but does not operate in 2020, 42 properties acquired in 2019, one property being operated under a temporary use permit, three Florida Keys properties that require redevelopment as a result of damage sustained from Hurricane Irma in 2017, five recently opened ground-up developments, one property undergoing redevelopment, and other miscellaneous transactions and activity.(15) Includes MH and annual RV sites, and excludes transient RV sites, as applicable.(16) As of December 31, 2020, total portfolio MH occupancy was 96.6 percent inclusive of the impact of over 1,200 recently constructed but vacant MH expansion sites, and annual RV occupancy was 100.0 percent.(17) Total sites for development were comprised of 75.7 percent for expansion, 22.2 percent for greenfield development and 2.2 percent for redevelopment.(18) MH recurring capital expenditures are necessary to maintain asset quality, including purchasing and replacing assets used to operate the communities. These capital expenditures include items such as: major road, driveway, pool improvements; clubhouse renovations; adding or replacing street lights; playground equipment; signage; maintenance facilities; manager housing and property vehicles. The minimum capitalized amount is five hundred dollars.(19) MH lot modification capital expenditures improve the asset quality of the community. These costs are incurred when an existing older home moves out, and the site is prepared for a new home, more often than not, a multi-sectional home. These activities, which are mandated by strict manufacturer’s installation requirements and state building code, include items such as new foundations, driveways, and utility upgrades.(20) Capital expenditures related to acquisitions represent the purchase price of existing operating properties (including marinas) and land parcels to develop expansions or new properties. These costs for the year ended December 31, 2020 include $40.6 million of capital improvements identified during due diligence that are necessary to bring the communities to the Company’s operating standards. For the years ended December 31, 2019 and 2018, these costs were $50.7 million and $94.6 million, respectively. These include items such as: upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovation including larger decks, heaters, and furniture; new maintenance facilities; and new signage including main signs and internal road signs. These are considered acquisition costs and although identified during due diligence, often require 24 to 36 months after closing to complete.(21) MH expansion and development expenditures consist primarily of construction costs and costs necessary to complete home site improvements, such as driveways, sidewalks and landscaping.(22) MH capital costs related to revenue generating activities consist primarily of garages, sheds, sub-metering of water, sewer and electricity. Revenue generating attractions at our RV resorts are also included here and, occasionally, a special capital project requested by residents and accompanied by an extra rental increase will be classified as revenue producing.Certain financial information has been revised to reflect reclassifications in prior periods to conform to current period presentation.
AttachmentExhibit 99.1 Press Release and Supplemental Package 2020.12.31