Insiders ranked by realized 90-day signed return on their open-market trades at Sun Communities Inc. Minimum 3 scored trades. Returns are signed - a sale followed by a rally counts against the insider.
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.01pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
+0.30pp
Flat
Net-tone change vs last year's 10-K.
MD&A
-0.27pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
Language change vs prior 10-K
Risk Factors (Item 1A) - words with the biggest YoY frequency increase
Negative rising
disruptions+2
conflicts+2
threats+2
lack+1
challenges+1
Positive rising
opportunities+1
successfully+1
adequately+1
efficiency+1
improving+1
Risk Factors (Item 1A)
10,189 words
ITEM 1A. RISK FACTORS
Our prospects are subject to certain uncertainties and risks. Our future results could differ materially from current results, and our actual results could differ materially from those projected in forward-looking statements as a result of certain risk factors. These risk factors include, but are not limited to, those set forth below, other one-time events, and important factors disclosed previously and from time to time in our other filings with the SEC.
MATERIAL RISKS RELATING TO OUR MH, RV, AND UK BUSINESSES
General economic conditions and the concentration of our MH, RV, and UK properties in certain geographic areas may affect our ability to generate revenue.
The market and economic conditions in our current markets generally, and specifically in metropolitan areas of our current markets, may significantly affect occupancy or rental rates. Occupancy and rental rates, in turn, may significantly affect our revenues, and if our properties do not generate revenues sufficient to meet our operating expenses, including debt service and capital expenditures, our cash flows, and ability to pay or refinance our debt obligations could be adversely affected.
As of December 31, 2025, 125 of our MH, RV, and UK communities, representing 26.4% of developed sites, are located in Florida; 89 communities, representing 19.4% of developed sites, are located in Michigan; 53 communities, representing 12.1% of developed sites, are located in the UK; 29 communities, representing 6.1% of developed sites, are located in Texas; and 37 communities, representing 4.9% of developed sites, are located in California. As a result of the geographic concentration of our communities in Florida, Michigan, the UK, Texas, and California, we are to the risks of in local economies or other local real estate market conditions which could affect occupancy rates, rental rates, and property values in these markets.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
discontinued+35
losses+5
impairment+4
closing+4
interruption+2
Positive rising
gain+11
gains+5
enhances+2
efficient+2
satisfaction+2
MD&A (Item 7)
12,931 words
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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 accompanying footnotes thereto included in this Annual Report on Form 10-K. In addition to the results presented in accordance with GAAP below, we have provided net operating income ("NOI") and FFO information as supplemental performance measures. Refer to Non-GAAP Financial Measures in this Item 7 for additional information.
OVERVIEW AND OUTLOOK
We are a fully integrated REIT. As of December 31, 2025, we owned and operated, directly or indirectly, or had an interest in, a portfolio of 513 developed properties located in the U.S., Canada, and the UK including 294 MH communities, 166 RV communities, and 53 UK communities.
SUN COMMUNITIES, INC.
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 our occupancy levels, property performance and cash flows. Our RV communities are designed to offer affordable vacation 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.
Our revenue would also be adversely affected if tenants and guests were unable to pay rent or if sites were unable to be rented on favorable terms. If we were unable to promptly relet or renew the leases for a significant number of the sites, or if the rental rates upon such renewal or reletting were significantly lower than expected rates, then our business and results of operations could be adversely affected. In addition, certain expenditures associated with each property (such as real estate taxes and maintenance costs) generally are not reduced when circumstances cause a reduction in income from the property. Furthermore, real estate investments are relatively illiquid and, therefore, will tend to limit our ability to vary our portfolio promptly in response to changes in economic or other conditions.
The following factors, among others, may adversely affect the revenues generated by our properties:
• the international, national, and local economic climate which may be adversely impacted by, among other factors, plant closings, industry slowdowns, inflation, tariffs or threats of tariffs, wars or other international conflicts, trade wars, immigration issues, and supply chain disruptions;
• local real estate market conditions such as the oversupply of MH or RV sites or a reduction in demand for MH or RV sites in an area, and an oversupply of, or a reduced demand for, manufactured homes;
• increased operating costs, including insurance premiums, real estate taxes, and utilities;
• competition from other available MH and RV communities and alternative forms of housing (such as apartment buildings and site-built single-family homes);
• a decrease in the number of people interested in the RV lifestyle;
• outbreaks of disease and related restrictions on business operations;
• changes in foreign currency exchange rates, including between the U.S. dollar and each of the British pound sterling, Canadian dollar, and Australian dollar;
• the difficulty facing potential purchasers in obtaining affordable financing as a result of heightened lending criteria;
• an increase or decrease in the rate of manufactured home repossessions which provide aggressively priced competition to new manufactured home sales;
• the lack of an established MH dealer network;
• the housing rental market which may limit the extent to which rents may be increased to meet increased expenses without decreasing occupancy rates;
• the perceptions by prospective tenants of the safety, convenience and attractiveness of our MH properties, and the neighborhoods where they are located;
• zoning or other environmental regulatory restrictions;
• our ability to effectively manage, maintain, and insure our properties; and
• the enactment of rent control laws or laws taxing the owners of manufactured homes.
SUN COMMUNITIES, INC.
Competition affects occupancy levels and rents, which could adversely affect our revenues.
The MH and RV industries are highly-fragmented. There are many international, national, and regional competitors in the markets we currently serve and in new markets that we may enter. Our properties are located in developed areas that include other MH or RV communities. The number of competitive communities in a particular area could have a material adverse effect on our ability to lease sites and increase rents charged at our properties or at any newly acquired properties. We may be competing with others with greater resources. In addition, other forms of multi-family residential properties, such as private and federally funded or assisted multi-family housing projects and single-family housing, provide housing alternatives to potential tenants of MH or RV communities.
The cyclical and seasonal nature of the RV and UK segments may lead to fluctuations in our operating results .
The RV and UK segments can experience cycles of growth and downturn due to seasonality patterns in demand and cyclicality. 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 geographical considerations related to when the parks are open. The RV segment typically shows a decline in demand over the winter months, yet usually produces higher growth in the spring and summer months due to higher use by vacationers. In the UK segment, vacation rental sites generally produce higher revenues between March and October. In addition, since our RV and UK properties are designed to offer vacation opportunities, economic cyclicality resulting in a downtown that affects discretionary spending and disposable income for leisure activities could adversely affect demand. Our results on a quarterly basis can fluctuate due to this cyclicality and seasonality.
We may not be able to integrate or finance our acquisitions and our acquisitions may not perform as expected.
We have acquired and intend to continue to selectively acquire MH and RV properties. Our acquisition activities and their success are subject to the following risks:
• we may be unable to acquire a desired property because of competition from other well-capitalized real estate investors, including both publicly traded REITs and institutional investment funds;
• even if we enter into an acquisition agreement for a property, it is usually subject to customary conditions to closing, including completion of due diligence investigations to our satisfaction, which may not be satisfied;
• even if we are able to acquire a desired property, competition from other real estate investors may significantly increase the purchase price;
• we may be unable to finance acquisitions on favorable terms;
• acquired properties may fail to perform as expected;
• acquired properties may be located in new markets where we face risks associated with a lack of market knowledge or understanding of the local economy, lack of business relationships in the area, and unfamiliarity with local governmental and permitting procedures; and
• we may be unable to quickly and efficiently integrate new acquisitions, particularly acquisitions of portfolios of properties, into our existing operations.
If any of the above risks occur, our business and results of operations could be adversely affected.
In addition, we may acquire properties subject to liabilities and we may be left with no, or limited, recourse, with respect to unknown liabilities. As a result, we may have to pay substantial sums to settle any liabilities asserted against us based upon ownership of newly acquired properties, which could adversely affect our cash flows.
Investments through joint ventures involve risks not present in properties in which we are the sole owner.
We have invested and may continue to invest as a joint venture partner in joint ventures. These investments involve risks, including, but not limited to, the possibility the other joint venture partner may have business goals which are inconsistent with ours, possess the ability to take or force action or withhold consent contrary to our requests, fail to provide capital or fulfill its obligations, or become insolvent and require us to assume and fulfill the joint venture's financial obligations. Conflicts arising between us and our joint venture partners may be difficult to manage or resolve and it could be difficult to manage or otherwise monitor the existing business arrangements. We and our joint venture partners may each have the right to initiate a buy-sell arrangement, which could cause us to sell our interest, or acquire a joint venture partner's interest, at a time when we otherwise would not have entered into such a transaction. Each joint venture agreement is individually negotiated, and our ability to operate, finance, or dispose of a property in our sole discretion may be limited to varying degrees depending on the terms of the applicable joint venture agreement.
SUN COMMUNITIES, INC.
Many of our properties are located in areas that experience extreme weather conditions and natural disasters and climate change may adversely affect our business.
Extreme weather or weather-related conditions and other natural disasters, including hurricanes, flash floods, sea-level rise, droughts, tornadoes, wildfires or earthquakes, may interrupt our operations, damage our properties and reduce the number of customers who utilize our properties in the affected areas. Many of our properties are on coastlines that are subject to hurricane seasons, flash flooding and sea level rise; in areas adversely affected by wildfires, such as the western U.S.; and in earthquake-prone areas, such as the West Coast. If there are prolongeddisruptions at our properties due to extreme weather or natural disasters, our results of operations and financial condition could be materially adversely affected.
While we maintain insurance coverage that may cover certain of the costs and loss of revenue associated with the effect of extreme weather and natural disasters at our properties, our coverage is subject to deductibles and limits on maximum benefits. We cannot assure you that we will be able to fully collect, if at all, on any claims resulting from extreme weather or natural disasters.
If any of our properties are damaged or if their operations are disrupted as a result of extreme weather or natural disasters, or if extreme weather or natural disastersadversely impact general economic or other conditions in the areas in which our properties are located or from which they draw their tenants and customers, our business, financial condition, and results of operations could be materially adversely affected.
Significant changes in the climate could exacerbate extreme weather conditions or natural disasters that may occur in areas where our properties are located, all of which may result in additional physical damage to, or a decrease in demand for, properties located in these areas or affected by these conditions. If the impact of climate change is material in nature, including significant property damage to or destruction of our properties, or occurs for lengthy periods of time, our financial condition or results of operations may be adversely affected.
While they are unpredictable, the impacts of climate change may change residential migration and vacation trends, which could reduce demand for our properties. If the areas in which our properties are located become less desirable places to live or vacation, the value of our properties and their ability to generate revenue may be materially adversely affected.
In addition, changes in federal, state, local, and foreign legislation and regulation based on concerns about climate change, as well as voluntary measures we take to combat climate change, could result in increased capital expenditures at our properties. For example, these could include expenditures to improve energy efficiency, improve resistance to inclement weather and provide for infrastructure improvement to support existing and emerging low-carbon technologies. These expenditures may not result in a corresponding increase in revenue, resulting in material adverse impacts to our financial results.
We may incur liability under environmental laws arising from conditions at properties we acquire or operations at the properties we own and operate.
Under various federal, state, local, and foreign laws, ordinances and regulations, an owner or operator of real estate is liable for the costs of removal or remediation of certain hazardous substances at, on, under, or in such property. Such hazardous substances may be used at or located on our properties. Such laws often impose liability without regard to whether the owner knew of, or was responsible for, the presence of such hazardous substances. The presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner's ability to sell or rent the property, to borrow using the property as collateral or to develop the property. Persons who arrange for the disposal or treatment of hazardous substances also may be liable for the costs of removal or remediation of such substances at a disposal or treatment facility owned or operated by another person. In addition, certain environmental laws impose liability for the management and disposal of asbestos-containing materials and for the release of such materials into the air. These laws may result in fines or penalties and may permit third parties to seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials.
As the purchaser of properties we acquire, or in connection with the operation of properties we own or manage, we may be liable for removal or remediation costs, governmental fines and injuries to persons and property. When we arrange for the treatment or disposal of hazardous substances at landfills or other facilities owned by other persons, we may be liable for the removal or remediation costs at such facilities.
As part of our standard acquisition due diligence, we subject our properties to a Phase I or similar environmental assessment as well as limited compliance evaluations (which involve general inspections without soil sampling or ground water analysis) completed by independent environmental and engineering consultants. In some cases, where these evaluations have recommended further, invasive investigations, those have also been conducted. While these environmental evaluations have not revealed any significant environmental liability that would have a material adverse effect on our business, they cannot reflect conditions arising after the studies were completed. No assurances can be given that existing environmental studies reveal all environmental liabilities, that any prior owner or operator of a property or neighboring owner or operator did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist with respect to any one or more properties.
SUN COMMUNITIES, INC.
Moreover, we cannot be sure that future laws, ordinances or regulations will not impose any material environmental liability, or that the current environmental condition of our properties will not be affected by tenants and occupants of the properties, by the condition of land or operations in the vicinity of our properties (such as the presence of underground storage tanks), or by unrelated third parties. Environmental liabilities that we may incur could have an adverse effect on our financial condition, results of operations, and cash flows.
We are subject to additional risks from our international investments.
We have significant ownership in the UK through our ownership of Park Holidays and other subsidiaries. Our investments in the UK and any other international investments we may acquire, subject us to additional risks, including:
• the laws, rules, and regulations applicable in such jurisdictions outside of the U.S., including those related to property ownership by foreign entities, consumer and data protection, privacy, network security, encryption, payments, and restricting us from removing profits earned from activities within the country to the U.S. (i.e., nationalization of assets located within a country);
• complying with a wide variety of foreign laws;
• fluctuations in exchange rates between foreign currencies and the U.S. dollar, and exchange controls;
• limited experience with local business and cultural factors that differ from our usual standards and practices;
• changes in the availability, cost and terms of mortgage funds and other borrowings resulting from varying national economic policies or changes in interest rates;
• reliance on local management;
• challenges in establishing effective controls and procedures to regulate operations in different regions and to monitor and ensure compliance with applicable regulations, such as applicable laws related to corrupt practices, employment, licensing, construction, climate change or environmental compliance;
• unexpected changes in regulatory requirements, tax, tariffs, trade barriers, and other laws within jurisdictions outside the U.S. or between the U.S. and such jurisdictions;
• potentially adverse tax consequences with respect to our properties;
• the impact of regional or country-specific business cycles and economic instability, including deterioration in political relations with the U.S., instability in, or further withdrawals from, the European Union or other international trade alliances or agreements;
• the impact of disruptions in global, regional or local supply chains, including disruptions occurring as a result of outbreaks of disease; and
• political instability, uncertainty over property rights, civil unrest, drug trafficking, political activism or the continuation or escalation of terrorist activities.
If we are unable to adequately address these risks, they could have a significant adverse effect on our operations.
We may not be able to integrate or finance our expansion and development activities.
We build and develop new MH and RV communities and we expand existing communities. Our construction and development pipeline may be exposed to the following risks which are in addition to those risks associated with the ownership and operation of established MH and RV communities:
• we may not be able to obtain financing with favorable terms for development which may make us unable to proceed with the development;
• we may be unable to obtain, or face delays in obtaining, necessary zoning, building and other governmental permits and authorizations, which could result in increased costs and delays, and even require us to abandon development of the property entirely if we are unable to obtain such permits or authorizations;
• we may abandon development opportunities that we have already begun to explore and as a result we may not recover expenses already incurred in connection with exploring such development opportunities;
• we may be unable to complete construction and lease-up of a property on schedule resulting in increased debt service expense and construction costs;
• we may incur construction and development costs for a property which exceed our original estimates due to increased materials, labor, or other costs, which could make completing the development uneconomical and we may not be able to increase rents to compensate for the increase in development costs which may impact our profitability;
• we may be unable to secure long-term financing on completion of development resulting in increased debt service and lower profitability; and
• occupancy rates and rents at a newly developed property may fluctuate depending on several factors, including market and economic conditions, which may result in the property not being profitable.
If any of these risks occur, our business and results of operations could be adversely affected.
SUN COMMUNITIES, INC.
Public health crises, such as outbreaks of disease, could materially and adversely affect our financial condition, operating results and cash flows.
A public health crisis, such as the COVID-19 pandemic, could have material and adverse effects on our ability to successfully operate our business and on our financial condition. The government and societal responses to public health crises are highly uncertain and we cannot predict with confidence the impact a public health crisis would have on our operations and financial condition.
Rent control legislation may harm our ability to increase rents.
National, state, and local rent control laws in certain jurisdictions may limit our ability to increase rents at our MH properties to recover increases in operating expenses and the costs of capital improvements. Enactment of such laws has been considered from time to time in other jurisdictions. Certain properties are located, and we may purchase additional properties, in markets that are either subject to rent control or in which rent-limiting legislation exists or may be enacted.
RISKS RELATED TO OUR DEBT FINANCINGS
Our debt could limit our operational flexibility or otherwise adversely affect our financial condition, and we may incur more debt in the future.
Our business is subject to risks normally associated with debt financing. As of December 31, 2025, we had approximately $4.3 billion of total debt outstanding, consisting of approximately $2.5 billion in collateralized term loans and debt that is secured by mortgage liens on 110 of our properties, and $1.8 billion of senior unsecured notes. As of December 31, 2025, 100% of our total debt was fixed rate financing. If we fail to meet our obligations under our secured debt, the lenders would be entitled to foreclose on all or some of the collateral securing such debt, which could have a material adverse effect on us and our ability to make expected distributions, and could threaten our continued viability.
We are subject to the risks normally associated with debt financing, including the following risks:
• our cash flows may be insufficient to meet required debt payments, or we may need to dedicate a substantial portion of our cash flows to pay our debt rather than to other areas of our business;
• our existing debt may limit our operating flexibility due to financial and other restrictive covenants, including restrictions on incurring additional debt;
• it may be more difficult for us to obtain additional financing for our operations, working capital requirements, capital expenditures, debt service or other general requirements;
• increases in interest rates will make obtaining new debt more expensive;
• we may be more vulnerable in the event of adverse economic and industry conditions or a downturn in our business;
• we may be placed at a competitive disadvantage compared to our competitors that have less debt; and
• we may not be able to refinance at all or on favorable terms, as our debt matures.
If any of the above risks occurred, our financial condition and results of operations could be materially adversely affected.
Despite our current debt levels, we may incur substantially more debt in the future. If new debt is added to our current debt levels, an even greater portion of our cash flows will be needed to satisfy our debt service obligations. As a result, the related risks that we now face could intensify and increase the risk of a default on our debt.
Covenants in our credit agreements and senior unsecured note indentures could limit our flexibility and adversely affect our financial condition.
The terms of our financing agreements and other debt require us to comply with a number of customary financial and other covenants. These covenants may limit our flexibility in our operations, and breaches of these covenants could result in defaults under the instruments governing the applicable debt even if we have satisfied our payment obligations. Our financing agreements contain certain cross-default provisions that could be triggered in the event that we default on our other debt. These cross-default provisions may require us to repay or restructure our senior credit facility in addition to any mortgage or other debt that is in default. If our properties were foreclosed upon, or if we are unable to refinance our debt at maturity or meet our payment obligations, the amount of our distributable cash flows, and our financial condition would be adversely affected.
Our senior credit facility contains various financial covenants including, but not limited to a maximum leverage ratio, a minimum fixed charge coverage ratio, and a maximum secured leverage ratio. In addition to our senior credit facility, our senior unsecured notes also contain various covenants including an aggregate debt test, a secured debt test, a debt service test, and a maintenance of total unencumbered assets test. These covenants may restrict our ability to pursue certain business initiatives or certain transactions that might otherwise be advantageous. Furthermore, failure to meet certain of these financial covenants could cause an event of default under and / or accelerate some or all of such debt which could have a material adverse effect on us.
SUN COMMUNITIES, INC.
An increase in market interest rates could raise our interest costs on future debt or adversely affect our stock price, and a decrease in interest rates may lead to additional competition for the acquisition of real estate or adversely affect our results of operations.
Our interest costs for any new debt may rise if interest rates increase. This increased cost could make the financing of any new acquisition more expensive, as well as lower our current period earnings. Rising interest rates could limit our ability to refinance existing debt when it matures or cause us to pay higher interest rates upon refinancing. In addition, an increase in interest rates could decrease our customers' access to credit, thereby decreasing the demand for manufactured homes and recreational vehicles. An increase in market interest rates may lead prospective purchasers of our common stock to expect a higher dividend yield, which could adversely affect the market price of our common stock. Decreases in interest rates may lead to additional competition for the acquisition of real estate due to a reduction in desirable alternative income-producing investments. Increased competition for the acquisition of real estate may lead to a decrease in the yields on real estate targeted for acquisition. In such circumstances, if we are not able to offset the decrease in yields by obtaining lower interest costs on our borrowings, our results of operations may be adversely affected.
Our hedging strategies may not be successful in mitigating our risks associated with interest rates and could reduce the overall returns on your investment.
We have historically used various derivative financial instruments to provide a level of protection against interest rate risks, but no hedging strategy can protect us completely. These instruments involve risks, such as the risk that the counterparties may fail to honor their obligations under these arrangements, that these arrangements may not be effective in reducing our exposure to interest rate changes, that a court could rule that such agreements are not legally enforceable and that we may have to post collateral to enter into hedging transactions, which we may lose if we are unable to honor our obligations. These instruments may also generate income that may not be treated as qualifying REIT income for purposes of the REIT income tests. In addition, the nature and timing of hedging transactions may influence the effectiveness of our hedging strategies. Poorly designed strategies or improperly executed transactions could actually increase our risk and losses. Moreover, hedging strategies involve transaction and other costs. We cannot assure you that our hedging strategy and the derivatives that we use will adequately offset the risk of interest rate volatility or that our hedging transactions will not result in losses that may reduce the overall return on your investment.
A downgrade in our credit ratings could have material adverse effects on our business and financial condition.
We intend to manage our operations to maintain our investment grade credit ratings from S&P Global and Moody's. These ratings are based on a number of factors, which include assessments of our financial strength, liquidity, capital structure, asset quality, and sustainability of cash flows and earnings. Changes in these factors could lead to a downgrade of our ratings, resulting in an adverse impact on our cost and availability of capital, which could in turn have a material adverse impact on our financial condition, results of operations, and liquidity.
TAX RISKS RELATED TO OUR STATUS AS A REIT
We may sufferadverse tax consequences and be unable to attract capital if we fail to qualify as a REIT.
We believe that since our taxable year ended December 31, 1994, we have been organized and operated, and intend to continue to operate, so as to qualify for taxation as a REIT under the Code. Although we believe that we have been and will continue to be organized and have operated and will continue to operate so as to qualify for taxation as a REIT, we cannot be assured that we have been or will continue to qualify as a REIT. Qualification as a REIT involves the satisfaction of numerous requirements on an annual and quarterly basis established under highly technical and complex Code provisions for which there are limited judicial or administrative interpretations and involves the determination of various factual matters and circumstances not entirely within our control. In addition, frequent changes occur in the area of REIT taxation, which requires us to continually monitor our tax status.
If we fail to qualify as a REIT in any taxable year, our taxable income could be subject to U.S. federal income tax at regular corporate rates. Moreover, unless entitled to relief under certain statutory provisions, we also would be disqualified from treatment as a REIT for the four taxable years following the year during which qualification was lost. This treatment would reduce our net earnings available for investment or distribution to shareholders because of the additional tax liability to us for the years involved. In addition, distributions to shareholders would no longer be required to be made.
Federal, state, and foreign income tax laws governing REITs and related interpretations may change at any time, and any such legislative or other actions affecting REITs could have a negative effect on us.
Federal, state, and foreign income tax laws governing REITs, or the administrative interpretations of those laws may be amended at any time. Changes to tax laws, regulations or administrative interpretations, which may be applied retroactively, could adversely affect us. We cannot predict whether, when, in what forms, or with what effective dates, the tax laws, regulations, and administrative interpretations applicable to us may be changed. Such changes could significantly affect either our ability to qualify for taxation as a REIT or the income tax consequences to us.
SUN COMMUNITIES, INC.
We intend for the Operating Partnership to be taxed as a partnership, but we cannot guarantee that it will qualify.
We believe that the Operating Partnership has been organized as a partnership and will qualify for treatment as such under the Code. However, if the Operating Partnership is deemed to be a "publicly traded partnership," it will be treated as a corporation instead of a partnership for federal income tax purposes unless at least 90% of its income is qualifying income as defined in the Code. The income requirements applicable to REITs and the definition of "qualifying income" for purposes of this 90% test are similar in most respects. Qualifying income for the 90% test generally includes passive income, such as specified types of real property rents, dividends, and interest. We believe that the Operating Partnership has and will continue to meet this 90% test, but we cannot guarantee that it has or will. If the Operating Partnership were to be taxed as a regular corporation, it would incur substantial tax liabilities, we would fail to qualify as a REIT for federal income tax purposes and our ability to raise additional capital could be significantly impaired.
Partnership tax audit rules could have a material adverse effect on us.
Under the rules applicable to U.S. federal income tax audits of partnerships, subject to certain exceptions, any audit adjustment to items of income, gain, loss, deduction or credit of a partnership (and a partner's allocable share thereof) is determined, and taxes, interest, and penalties attributable thereto are assessed and collected, at the partnership level. Unless the partnership makes an election or takes certain steps to require the partners to pay their tax on their allocable shares of the adjustment, it is possible that partnerships in which we directly or indirectly invest, including the Operating Partnership, would be required to pay additional taxes, interest and penalties as a result of an audit adjustment. We, as a direct or indirect partner of the Operating Partnership and other partnerships, could be required to bear the economic burden of those taxes, interest, and penalties even though the Company, as a REIT, may not otherwise have been required to pay additional corporate-level tax. These rules are significant for collecting tax in partnership audits and there can be no assurance that these rules will not have a material adverse effect on us.
Our ability to accumulate cash may be restricted due to certain REIT distribution requirements.
In order to qualify as a REIT, we must distribute to our shareholders at least 90% of our REIT taxable income (calculated without any deduction for dividends paid and excluding net capital gain) and to avoid federal income taxation, our distributions must not be less than 100% of our REIT taxable income, including net capital gains. As a result of the distribution requirements, we do not expect to accumulate significant amounts of cash. Accordingly, these distributions could significantly reduce the cash available to us in subsequent periods to fund our operations and future growth.
Our taxable REIT subsidiaries, or TRSs, are subject to special rules that may result in increased taxes.
As a REIT, we must pay a 100% penalty tax on certain payments that we receive if the economic arrangements between us and any of our TRSs are not comparable to similar arrangements between unrelated parties. The Internal Revenue Service may successfully assert that the economic arrangements of any of our inter-company transactions are not comparable to similar arrangements between unrelated parties. This would result in unexpected tax liability which would adversely affect our cash flows.
Dividends payable by REITs do not qualify for the reduced tax rates applicable to certain dividends.
The maximum federal tax rate for certain qualified dividends payable to domestic shareholders that are individuals, trusts, and estates is 20%. Dividends payable by REITs, however, are generally not eligible for this reduced rate, although Federal tax law permits a 20% deduction equal to the amount of qualifying REIT dividends received, thus bringing the maximum federal tax rate on qualifying REIT dividends to 29.6%. While this rule does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular qualified corporate dividends could cause investors who are individuals, trusts, and estates to perceive investments in REITs to be relatively less competitive than investments in stock of non-REIT corporations that pay dividends, which could adversely affect the comparative value of the stock of REITs, including our common stock and any preferred stock.
Complying with REIT requirements may cause us to forego otherwise attractiveopportunities.
To remain qualified as a REIT for federal income tax purposes, we must continually satisfy requirements and tests under the tax law concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our shareholders, and the ownership of our stock. In order to meet these tests, we may be required to forego or limit attractive business or investment opportunities and distribute all of our net earnings rather than invest in attractiveopportunities or hold larger liquid reserves. Therefore, compliance with the REIT requirements may hinder our ability to operate solely to maximize profits.
SUN COMMUNITIES, INC.
RISKS RELATED TO OUR STRUCTURE
Certain provisions in our governing documents may make it difficult for a third-party to acquire us.
9.8% Ownership Limit. In order to qualify and maintain our qualification as a REIT, not more than 50% of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer individuals. Thus, ownership of more than 9.8%, in number of shares or value, of the issued and outstanding shares of our capital stock by any single shareholder has been restricted, with certain exceptions, for the purpose of maintaining our qualification as a REIT under the Code. Such restrictions in our charter do not apply to Milton M. Shiffman, Gary A. Shiffman, and Robert B. Bayer; trustees, personal representatives, and agents to the extent acting for them or their respective estates; or certain of their respective relatives.
The 9.8% ownership limit, as well as our ability to issue additional shares of common stock or shares of other stock (which may have rights and preferences over the common stock), may discourage a change of control of the Company and may also: (a) deter tender offers for the common stock, which offers may be advantageous to shareholders; and (b) limit the opportunity for shareholders to receive a premium for their common stock that might otherwise exist if an investor were attempting to assemble a block of common stock in excess of 9.8% of our outstanding shares or otherwise effect a change of control of the Company.
Preferred Stock. Our charter authorizes the Board of Directors to issue up to 20,000,000 shares of preferred stock, none of which is currently outstanding, and to establish the preferences and rights (including the right to vote and the right to convert into shares of common stock) of any shares issued. The power to issue preferred stock could have the effect of delaying or preventing a change in control of the Company even if a change in control were in the shareholders' interest.
Certain provisions of Maryland law could inhibit changes in control, which may discourage third parties from conducting a tender offer or seeking other change of control transactions that could involve a premium price for our common stock or that our shareholders otherwise believe to be in their best interest.
Certain provisions of the Maryland General Corporation Law ("MGCL") may have the effect of inhibiting a third-party from making a proposal to acquire us or of impeding a change of control under circumstances that otherwise could provide the holders of shares of our capital stock with the opportunity to realize a premium over the then-prevailing market price of such shares, including:
• "Business combination" provisions that, subject to limitations, prohibit certain business combinations between us and an "interested shareholder" (defined generally as any person who beneficially owns 10% or more of the voting power of our shares or an affiliate thereof or an affiliate or associate of ours who was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then outstanding voting stock at any time within the two-year period immediately prior to the date in question) for five years after the most recent date on which the shareholder becomes an interested shareholder, and thereafter impose fair price and / or supermajority and shareholder voting requirements on these combinations; and
• "Control share" provisions that provide that "control shares" of our company (defined as shares that, when aggregated with other shares controlled by the shareholder, entitle the shareholder to exercise one of three increasing ranges of voting power in electing directors) acquired in a "control share acquisition" (defined as the direct or indirect acquisition of ownership or control of issued and outstanding "control shares") have no voting rights except to the extent approved by our shareholder by the affirmative vote of at least two-thirds of all the votes entitled to be cast on the matter, excluding all interested shares.
The provisions of the MGCL relating to business combinations do not apply, however, to business combinations that are approved or exempted by our Board of Directors prior to the time that the interested shareholder becomes an interested shareholder. As permitted by the statute, our Board of Directors has by resolution exempted Milton M. Shiffman, Robert B. Bayer, and Gary A. Shiffman, their affiliates and all persons acting in concert or as a group with the foregoing, from the business combination provisions of the MGCL and, consequently, the five-year prohibition and the supermajority vote requirements will not apply to business combinations between us and these persons. As a result, these persons may be able to enter into business combinations with us that may not be in the best interests of our shareholder without compliance by our company with the supermajority vote requirements and the other provisions of the statute.
Also, pursuant to a provision in our bylaws, we have exempted any acquisition of our stock from the control share provisions of the MGCL. However, our Board of Directors may, by amendment to our bylaws, opt into the control share provisions of the MGCL at any time in the future.
SUN COMMUNITIES, INC.
Additionally, Subtitle 8 of Title 3 of the MGCL permits our Board of Directors, without shareholder approval and regardless of what is currently provided in our charter or bylaws, to elect to be subject to certain provisions relating to corporate governance that may have the effect of delaying, deferring or preventing a transaction or a change of control of our company that might involve a premium to the market price of our common stock or otherwise be in our shareholders' best interests. These provisions include a classified board; two-thirds vote to remove a director; that the number of directors may only be fixed by the Board of Directors; that vacancies on the board as a result of an increase in the size of the board or due to death, resignation or removal can only be filled by the board, and the director appointed to fill the vacancy serves for the remainder of the full term of the class of director in which the vacancy occurred; and a majority requirement for the calling by shareholders of special meetings. Other than a classified board, the filling of vacancies as a result of the removal of a director and a majority requirement for the calling by shareholders of special meetings, we are already subject to these provisions, either by provisions of our charter and bylaws unrelated to Subtitle 8 or by reason of an election to be subject to certain provisions of Subtitle 8. In the future, our Board of Directors may elect, without shareholder approval, to make us subject to the provisions of Subtitle 8, to which we are not currently subject.
Our Board of Directors has power to adopt, alter or repeal any provision of our bylaws or make new bylaws, provided, however, that our shareholders may alter or repeal any provision of our bylaws and adopt new bylaws if any such alteration, repeal or adoption is approved by the affirmative vote of a majority of all votes entitled to be cast on the matter.
GENERAL RISK FACTORS
If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results, which could result in a loss of investor confidence and adversely affect the market price of our common stock.
We are required to establish and maintain internal control over financial reporting and disclosure controls and procedures. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with US generally accepted accounting principles ("GAAP"). Disclosure controls and procedures are processes designed to ensure that information required to be disclosed is communicated to management and reported in a timely manner. We cannot be certain that we will successfully maintain adequate control over our financial reporting and disclosure controls and procedures. As described in Part II, Item 9A, "Controls and Procedures," management identified a material weakness as of December 31, 2024, which was remediated in 2025, relating to the lack of an effective risk assessment process 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. As part of management's evaluation of this material weakness, it had been identified that certain other deficiencies in control activities had materialized as a result of the deficiency in the Company's risk assessment.
Although such material weakness was remediated in 2025, we can give no assurances that additional material weaknesses will not occur in the future. In addition, to the extent we make additional significant acquisitions, our internal controls will become more complex and may require significantly more resources to ensure that our disclosure controls and procedures remain effective. Acquisitions can pose challenges in implementing the required processes, procedures, and controls in the operations of the companies that we acquire. Companies that are acquired by us may not have disclosure controls and procedures or internal control over financial reporting that are as thorough or effective as those required by the securities laws that currently apply to us.
If we cannot remediate future material weaknesses in a timely manner, they may adversely affect our ability to record, process, summarize, and report financial information timely and accurately and our financial statements may contain material misstatements or omissions. In addition, we may experience delays or be unable to meet our reporting obligations or to comply with SEC rules and regulations, which could result in investigations and sanctions by regulatory authorities. Any of these results may, among other adverse consequences, cause investors to lose confidence in our reported financial information, incur the expense of remediation, result in regulatory scrutiny, litigation, investigations or enforcement actions, limit our ability to access the capital markets, lead to a decline in our stock price, and otherwise have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Our share price could be volatile and could decline, resulting in a substantial or complete loss on our shareholders' investment.
Our common stock has experienced significant price and volume fluctuations. In the future, the market price of our common stock and preferred stock could be similarly volatile, and investors in our common stock and preferred stock may experience a decrease in the value of their shares, including decreases unrelated to our operating performance or prospects. The price of our common stock and preferred stock could be subject to wide fluctuations in response to a number of factors, including:
• issuances of other equity securities in the future, including new series or classes of preferred stock;
• our operating performance and the performance of other similar companies;
• our ability to maintain compliance with covenants contained in our debt facilities and our unsecured notes;
• actual or anticipated variations in our operating results, funds from operations ("FFO"), cash flows or liquidity;
• changes in expectations of future financial performance or changes in our earnings estimates or those of analysts;
SUN COMMUNITIES, INC.
• changes in our distribution policy;
• publication of research reports about us or the real estate industry generally;
• increases in market interest rates that lead purchasers of our common stock and preferred stock to demand a higher dividend yield;
• changes in foreign currency exchange rates, including between the U.S. dollar and each of the British pound sterling, Canadian dollar, and Australian dollar;
• changes in market valuations of similar companies;
• outbreaks of disease, and related restrictions on business operations;
• adverse market reaction to the amount of our debt outstanding at any time, the amount of our debt maturing in the near-term and medium-term and our ability to refinance our debt, or our plans to incur additional debt in the future;
• additions or departures of key management personnel;
• speculation in the press or investment community;
• equity issuances by us, or share resales by our shareholders or the perception that such issuances or resales may occur;
• actions by institutional shareholders;
• litigation or threatenedlitigation, which may divert our management's time and attention, require us to pay damages and expenses or restrict the operation of our business;
• failure to qualify and maintain our qualification as a REIT; and
• general market and economic conditions.
Many of the factors listed above are beyond our control. Those factors may cause the market price of our common stock or preferred stock to decline significantly, regardless of our financial condition, results of operations, and prospects. It is impossible to provide any assurance that the market price of our common stock or preferred stock will not fall in the future, and it may be difficult for holders to resell shares of our common stock or preferred stock at prices they find attractive, or at all. In the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert our management's attention and resources.
Substantial sales or issuances of our common or preferred stock could cause our stock price to fall .
The sale or issuance of substantial amounts of our common stock or preferred stock, whether directly by us or in the secondary market, the perception that such sales could occur or the availability of future issuances of shares of our common stock, preferred stock, OP units or other securities convertible into or exchangeable or exercisable for our common stock or preferred stock, could materially and adversely affect the market price of our common stock or preferred stock and our ability to raise capital through future offerings of equity or equity-related securities. In addition, we may issue capital stock that is senior to our common stock in the future for a number of reasons, including to finance our operations and business strategy, to adjust our ratio of debt to equity or for other reasons.
Based on the applicable conversion ratios then in effect, as of February 17, 2026, in the future we may issue to the limited partners of the Operating Partnership, up to approximately 4.6 million shares of our common stock in exchange for their OP units. The limited partners may sell such shares pursuant to registration rights, if available, or an available exemption from registration. As of February 17, 2026, there were no outstanding options to purchase shares of our common stock under our equity incentive plans, and we had the authority to issue restricted stock awards or options to purchase up to an additional 2.6 million shares of our common stock pursuant to our equity incentive plans. In addition, we have entered into an At the Market Offering Sales Agreement to sell shares of common stock. As of December 31, 2025, we have remaining capacity to sell up to an additional $725.2 million of common stock under this agreement. No prediction can be made regarding the effect that future sales of shares of our common stock or our other securities will have on the market price of shares.
Our business operations may not generate the cash needed to make distributions on our capital stock or to service our debt, and we may adjust our common stock distribution policy.
Our ability to make distributions on our common stock and preferred stock, and payments on our debt and to fund planned capital expenditures will depend on our ability to generate cash in the future. We cannot assure you that our business will generate sufficient cash flows from operations or that future borrowings will be available to us in an amount sufficient to enable us to make distributions on our common stock or preferred stock, to pay our debt, or to fund our other liquidity needs.
The decision to declare and pay distributions on shares of our common stock in the future, as well as the timing, amount, and composition of any such future distributions, will be at the sole discretion of our Board of Directors in light of conditions then existing, including our earnings, financial condition, capital requirements, debt maturities, the availability of debt and equity capital, applicable REIT and legal restrictions, general overall economic conditions, and other factors. Any change in our distribution policy could have a material adverse effect on the market price of our common stock.
SUN COMMUNITIES, INC.
We rely on key management .
We depend on the efforts of our executive officers, including Charles D. Young, Fernando Castro-Caratini, John B. McLaren, Bruce D. Thelen, Marc Farrugia, and Aaron Weiss. The loss of services of one or more of these executive officers could have a temporary adverse effect on our operations. We do not currently maintain or contemplate obtaining any "key-man" life insurance on our executive officers.
Cybersecurity breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.
We rely intensively on information technology to account for tenant transactions, manage the privacy of tenant data, communicate internally and externally, and analyze our financial and operating results. In the ordinary course of our business, we collect and store sensitive data, including our proprietary business information and that of our tenants, clients, vendors, and employees in our facilities and on our network. In addition, we engage third-party service providers that may have access to such information in connection with providing necessary information technology and security and other business services to us. This information may include personally identifiable information such as social security numbers, banking information, and credit card information.
We address potential breaches or disclosure of this confidential information by implementing a variety of security measures intended to protect the confidentiality and security of this information, including (among others) engaging reputable, recognized firms to help us design and maintain our information technology and data security systems, including testing and verification of their proper and secure operations on a periodic basis. We also maintain cyber risk insurance to provide some coverage for certain risks arising out of data and network breaches. Our senior leadership regularly updates the Board of Directors on security matters and meets at least annually to review program progress and plans, incidents if any, and emerging risks.
Despite our security measures, our information technology and infrastructure, as well as that of our third-party vendors, may be vulnerable to attacks by hackers (including through malware, ransomware, computer viruses, and email phishing schemes) or breached due to employee error, malfeasance, fire, flood or other physical event, or other disruptions. Furthermore, the risk of a breach or security failure, particularly through cyberattacks or cyber intrusion, has generally increased because of the rise in new technologies, including artificial intelligence, and the increased sophistication and activities of the perpetrators of attempted attacks and intrusions. Any such breach or disruption could compromise our or a third-party vendor's network and the information stored there could be accessed, publicly disclosed, lost, or stolen. Any such access, disclosure, or other loss of information could:
• result in legal claims or proceedings,
• disrupt our operations, including our ability to service our tenants and our ability to analyze and report our financial and operating results,
• decrease our revenues,
• damage our reputation,
• cause a loss of confidence,
• increase our insurance premiums, or
• have other material adverse effects on our business.
We depend on continuous access to the internet to use our cloud-based applications. Damage to, or failure of our information technology systems, including as a result of any of the reasons described above, could adversely affect our results of operations as we may incur significant costs or data loss. We continually assess new and enhanced information technology solutions to manage the risk of system failure or interruption.
The development and use of artificial intelligence ("AI") in the workplace presents risks and challenges that may adversely impact our business and operating results.
We have begun leveraging AI and machine learning capabilities for our employees to use in their day-to-day operations. Failure to invest adequately in such capabilities may result in us lagging behind our competitors in terms of improving operational efficiency and achievingsuperior outcomes for our business and our customers. As we embark on these initiatives, we may encounter challenges such as a shortage of appropriate data to train internal AI models, a lack of skilled talent to effectively execute our strategy of leveraging AI internally, or the possibility that the tools we utilize may not deliver the intended value. Use of third-party AI tools can also bring information security, data privacy, and legal risks. Failure to successfully harness these AI tools could negatively impact our business and operating results.
SUN COMMUNITIES, INC.
Losses in excess of our insurance coverage or uninsuredlosses could adversely affect our operating results and cash flows and upon renewal of our insurance policies, our coverage may change and our costs may increase, including our assumption of a greater proportion of risk through self-insurance.
We have a significant concentration of MH and RV properties on coastlines and in other areas where natural disasters or other catastrophic events such as hurricanes, flash floods, sea-level rise, droughts, tornadoes, wildfires, or earthquakes could negatively impact our operating results and cash flows. We maintain comprehensive liability, fire, property, business interruption, general liability, and (where appropriate) flood and earthquake insurance, and other lines of insurance we have determined to be appropriate for our business through a combination of self-insurance and insurance provided by third-party providers with commercially reasonable coverage, including deductibles and limits. We believe the policy specifications and insured limits are appropriate and adequate given the relative risk of loss, the cost of the coverage, and industry practice. However, certain types of losses including, but not limited to, riots or acts of war, may be either uninsurable or not economically insurable. In the event an uninsuredloss occurs, we could lose both our investment in and anticipated profits and cash flows from the affected property. We would also continue to be obligated to repay any mortgage debt or other obligations related to the community. If an uninsured liability to a third party were to occur, we would incur the cost of defense and settlement with, or court ordered damages to, that third party. A significant uninsured property or liability loss could have a material adverse effect on our business and our financial condition and results of operations.
We renew our insurance policies annually. As a result of increased insurance claims across the industry and other market conditions, it has been more difficult to obtain insurance, but in particular property insurance covering named windstorms, business interruption, flood, and earthquake insurance. There are fewer insurers willing to provide policies, and policies increasingly include lower coverage limits, higher deductibles, and higher premiums. These conditions may cause us to change the types and amounts of insurance we carry and may provide us with reduced coverage and / or higher costs. This has resulted in a change in our insurance purchasing philosophy and strategy, which has resulted in the assumption of greater risks to offset insurance market fluctuations.
Expanding social media platforms present new challenges.
Social media outlets continue to grow and expand, which presents us with new risks. Adverse content about us and our properties on social media platforms could result in damage to our reputation or brand. Improper posts by employees or others could result in disclosure of confidential or proprietary information regarding our operations.
Our operations are subject to regulation under various federal, state, local, and foreign laws and regulations that may expose us to significant costs and liabilities.
Our properties and the operations at them are subject to regulation under various federal, state, local, and foreign laws and regulations. Compliance with laws and regulations that govern our operations may require expenditures and modifications of development plans and operations that could have a detrimental effect on the operations of our properties and our financial condition, results of operations, and cash flows. There can be no assurance that the application of laws, regulations, or policies, including proposed federal or state legislative or regulatory initiatives or policy recommendations that may limit or restrict ownership of housing or real estate by certain classes of institutional investors, or changes in such laws, regulations and policies, will not occur in a manner that could have a detrimental effect on any property.
We may be adversely impacted by fluctuations in foreign currency exchange rates.
Our current and future investments in and operations of UK, Canadian, and Australian, properties are or will be exposed to the effects of changes in the British pound sterling, Canadian dollar, and Australian dollar, respectively, against the U.S. dollar. Changes in foreign currency exchange rates cannot always be predicted; as a result, substantial unfavorable changes in exchange rates could have a material adverse effect on our financial condition and results of operations.
Deterioration in general economic conditions in the United States, and globally, including the effect of prolonged periods of inflation, could harm our business and results of operations.
Our business and results of operations could be adversely affected by changes in national or global economic conditions. These conditions include but are not limited to inflation, deflation, rising interest rates, availability of capital markets, energy availability and costs, the negative impacts caused by outbreaks of disease and public health crises, negative impacts resulting from military conflicts, tariffs or threats of tariffs, wars or other international conflicts, trade wars, immigration issues, supply chain disruptions, and the effects of other governmental initiatives to manage economic conditions.
enhance
opportunities
In 2025, we continued our portfolio optimization and simplification strategy by completing the Safe Harbor Sale for total net cash proceeds of $5.5 billion, generating a total gain on sale of $1.5 billion. The Safe Harbor Sale accelerates our strategy of focusing on our core business and significantly enhances our leverage profile and financial flexibility. We have deployed the majority of 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. Refer to Note 2, "Assets Held for Sale and Discontinued Operations," in our accompanying Consolidated Financial Statements for additional details related to the Safe Harbor Sale.
Pursuant to our portfolio optimization strategy, we completed targeted, growth-oriented investment and acquisition opportunities in 2025, while also continuing our targeted disposition program to divest non-strategic assets in an effort to simplify management and maintain financial flexibility. During the year ended December 31, 2025, we acquired 11 MH and three RV properties for total cash consideration of $457.0 million and repurchased the titles to all 32 UK properties that were previously controlled via ground leases for total cash consideration of $386.8 million. Also during the year, we sold four MH properties, three RV properties, and three development land parcels in the U.S. and UK for a gross sale price of $202.6 million. The property dispositions have strengthened our financial position by enabling us to reduce debt while also exiting non-core markets. We remain focused on maximizing real property income, Same Property NOI growth, and Core FFO per share growth, which we believe will enhance long-term shareholder value.
Leadership Transition
Charles D. Young began serving as our CEO and as a Director on October 1, 2025 . Mr. Young succeeds Gary Shiffman, who retired as our CEO after a distinguished 40 years leading Sun Communities. We entered into an employment agreement with Mr. Young under which he 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.
Mr. Shiffman will continue to serve as the Chairman of our Board of Directors. Refer to the Form 8-K filed with the SEC on December 16, 2025 for additional details related to Mr. Shiffman's transition services agreement.
SUN COMMUNITIES, INC.
EXECUTIVE SUMMARY
2025 General Overview
Key operational and financial highlights included the following:
• Completed the disposition of the Safe Harbor Marinas business for an aggregate purchase price of $5.65 billion .
• Acquired 11 MH and three RV properties for total cash consideration of $457.0 million, which was primarily sourced from 1031 exchange escrow accounts to minimize the tax impact from the Safe Harbor Sale.
• Repurcha sed 4.3 million shares of our common stock at an average cost of $125.62 per share for a total of $539.1 million.
• Completed the redemption of $956.5 million in outstanding unsecured senior notes, inclusive of prepayment costs of $56.5 million.
• Completed the repayment of $1.6 billion under our senior credit facility and $737.7 million of secured mortgage debt, inclusive of prepayments costs of $45.9 million .
• Entered into a new $2.0 billion multi-currency revolving credit facility that matures on January 31, 2030.
• Completed the repurchase of titles to 32 UK properties that were previously controlled via ground leases, reducing our financial liability by $355.9 million.
• Total revenues from continuing operations for 2025 we re $2.3 billion, consistent with 2024 total revenues.
• Net income from continuing operations was $0.6 million in 2025, as compared to $32.9 million in 2024.
• Net income attributable to SUI common shareholders was $1.4 billion, as compared to a net income attributable to SUI common shareholders of $89.0 million in the prior year, driven primarily by a total gain of $1.5 billion from the Safe Harbor Sale in 2025.
• Achieved annual Core FFO of $6.68 per diluted share and OP unit.
• Achieved real property Same Property NOI gro wth of 8.9% for MH and 3.5% for the UK over 2024. For the RV segment, we experienced a decline in Same Property NOI growth of 1.4%, driven by lower than anticipated real property - transient revenues.
• Increased Same Property adjusted blended occupancy for MH and RV by 40 basis points to 99.1% as compared to 98.7% in 2024.
Property Operations
Occupancy in our MH and annual RV properties, as well as our ability to increase rental rates, directly affect revenues. Our revenue streams are predominantly derived from customers renting our sites on a long-term basis. Our Same Property communities continue to achieve revenue and occupancy increases which drive continued NOI growth.
Year Ended December 31,
Portfolio Information:
Occupancy % - Total Portfolio - MH and Annual RV Occupancy (1)
Occupancy % - Same Property - Adjusted MH and Annual RV Occupancy (1)(2)
Core FFO per share
Real property NOI - Total Portfolio (in millions)
Real property NOI - Same Property (in millions) - MH and RV (3)
Real property NOI - Same Property (in millions) - UK
(1) Occupancy percentage includes annual RV sites and excludes transient RV sites.
(2) Occupancy percentage excludes recently completed but vacant expansion sites.
SUN COMMUNITIES, INC.
Markets
Our MH and RV properties are largely concentrated in the U.S. in Florida, Michigan, Texas, and California, which collectively contain 64.7% of our total MH and RV sites. We have expanded our market share in multiple states through acquisitions and increased our property holdings in high-growth areas of the U.S. including retirement and vacation destinations. The age demographic of RV communities is attractive, as the population of retirement age adults in the U.S. is growing.
Our UK properties are located in irreplaceable coastal destination locations that are a short drive from London and other urban locations. Our UK properties are largely concentrated in England, which contain 93.2% of our total holiday parks.
The following table identifies our largest MH and RV markets by total sites:
December 31, 2025
Major Market
Segment
Number of Properties
Total Sites
% of Total Sites
Occupancy % (1)
Revenue %
Florida
Florida Total
Michigan
Michigan Total
California
California Total
Texas
Texas Total
Connecticut
Connecticut Total
Maine
Maine Total
New Jersey
New Jersey Total
Arizona
Arizona Total
Colorado
Colorado Total
Indiana
Indiana Total
New York
New York Total
Maryland
Maryland Total
Other
Other Total
Total
MH / RV Total
SUN COMMUNITIES, INC.
December 31, 2024
Major Market
Segment
Number of Properties
Total Sites
% of Total Sites
Occupancy % (1)
% Revenue
Florida
Florida Total
Michigan
Michigan Total
California
California Total
Texas
Texas Total
Connecticut
Connecticut Total
Maine
Maine Total
New Jersey
New Jersey Total
Arizona
Arizona Total
Colorado
Colorado Total
Indiana
Indiana Total
New York
New York Total
Maryland
Maryland Total
Other
Other Total
Total
MH / RV Total
The following table identifies our holiday park markets in the UK by total sites:
December 31, 2025
December 31, 2024
Major Market
Number of Properties
Total Sites
% of Total Sites
Occupancy % (1)
% Revenue
Number of Properties
Total Sites
% of Total Sites
Occupancy % (1)
% Revenue
England
Scotland / Wales
Total
(1) Occupancy percentage excludes transient RV sites. Percentage calculated by dividing revenue producing sites by developed sites. A revenue producing site is defined as a site that is occupied by a paying resident or reserved by a customer with annual or seasonal usage rights. A developed site is defined as an adequately sized parcel of land that has road and utility access which is zoned and licensed (if required) for use as a home site.
SUN COMMUNITIES, INC.
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 NOI and FFO as supplemental performance measures. We believe NOI and FFO are appropriate measures given their wide use by and relevance to investors and analysts. Investors and analysts following the real estate industry use these supplemental non-GAAP measures to assess REITs. 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 net income for the effects of GAAP depreciation / amortization of real estate assets and gains or losses on real estate dispositions. 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 net cash provided by 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. For the UK segment, we present Same Property NOI growth rate information on a constant currency basis to provide a framework for assessing how our underlying properties performed after excluding the effects of changes in exchange rates. We believe that the presentation of UK Same Property NOI on a constant currency basis helps to improve the ability to understand our performance because it excludes the effects of foreign currency volatility which are not indicative of our core operating results in the region.
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 to FFO, 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") to evaluate our performance. 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.
SUN COMMUNITIES, INC.
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. Certain financial information has been revised to reflect reclassifications in prior periods to conform to current period presentation.
RESULTS OF OPERATIONS
Summary Statements of Operations
The following tables reconcile the Net income / (loss) attributable to SUI common shareholders to NOI and summarize our consolidated financial results (in millions):
Year Ended December 31,
Net Income / (Loss) Attributable to SUI Common Shareholders
Interest income
Brokerage commissions and other revenues, net
General and administrative
Catastrophic event-related charges, net
Business combination expense
Depreciation and amortization
Asset impairments
Goodwill impairment
Loss on extinguishment of debt
Interest expense
Interest on mandatorily redeemable preferred OP units / equity
Loss on remeasurement of marketable securities
(Gain) / loss on foreign currency exchanges
Gain on disposition of properties
Other (income) / expense, net
Loss on remeasurement of notes receivable
Income from nonconsolidated affiliates
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates
Current tax expense
Deferred tax benefit
Net income from discontinued operations, net
Add: Preferred return to preferred OP units / equity interests
Add: Income / (loss) attributable to noncontrolling interests
NOI
Year Ended December 31,
Real property NOI (1)
Home sales NOI (1)
Ancillary NOI (1)
NOI
(1) Excludes properties classified as discontinued operations. During the years ended December 31, 2025, 2024, and 2023 our marina properties generated total NOI of $93.7 million, $322.7 million, and $312.0 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.
SUN COMMUNITIES, INC.
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. The following table presents the seasonality of real property-transient revenue:
Real property - transient revenue
(in millions)
For the Three Months Ended
Year
March 31
June 30
September 30
December 31
Total
Real Property Operations - Total Portfolio
The following tables reflect certain financial and other information for our real estate operations by segment (in millions, except for statistical information):
Year Ended December 31, 2025
Year Ended December 31, 2024
Total
Total
Revenues
Real property (excluding transient)
Real property - transient
Total operating revenues
Expenses
Property operating expenses
Real Property NOI
As of December 31, 2025
As of December 31, 2024
Total
Total
Number of Properties
Sites
Sites (1)
Transient sites
Total
Occupancy
N/A = Not applicable.
(1) MH annual sites included 12,518 and 10,923 rental homes in our Rental Program at December 31, 2025 and 2024, respectively. Our investment in occupied rental homes at December 31, 2025 was $921.3 million, an increase of 17.7% from $783.0 million at December 31, 2024.
For the year ended December 31, 2025, the $43.5 million, or 4.3%, increase in Real Property NOI as compared to the same period in 2024, consists of an increase of $56.0 million from Same Property MH, and an increase of $2.7 million from Same Property UK, partially offset by an NOI decrease of $11.1 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.
Real Property Operations - North America Same Property Portfolio
In order to evaluate the growth of the Same Property portfolio, management has classified certain items differently than our GAAP statements. 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. A significant portion of our utility charges are re-billed to our residents. Additionally, for the UK segment, the amounts in the tables below reflect constant currency for comparative purposes.
SUN COMMUNITIES, INC.
The following tables reflect certain financial and other information for our Same Property MH and RV portfolios as of and for the years ended December 31, 2025 and 2024 (in millions, except for statistical information):
Year Ended December 31,
Total Change
% Change (2)
Total
Total
Total
Same Property Revenues
Real property (excluding transient)
Real property - transient
Total Same Property operating revenues
Same Property Expenses
Same Property operating expenses (1)(3)
Real Property NOI
Year Ended December 31,
Total Change
% Change (2)
Total
Total
Total
Same Property Revenues
Real property (excluding transient)
Real property - transient
Total Same Property operating revenues
Same Property Expenses
Same Property operating expenses (1)(3)
Real Property NOI
(1) We net certain utilities revenues (which include utility reimbursement revenues from residents) against related utility expenses in property operating expenses as follows (in millions):
Year Ended December 31, 2025
Year Ended December 31, 2024
Total
Total
Utility revenue netted against related utility expense
Year Ended December 31, 2024
Year Ended December 31, 2023
Total
Total
Utility revenue netted against related utility expense
(2) Percentages are calculated based on unrounded numbers.
(3) 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.
Year Ended December 31,
Year Ended December 31,
Change
% Change (3)
Change
% Change (3)
Payroll and benefits
Real estate taxes
Supplies and repairs
Utilities
Legal, state / local taxes, and insurance
Other
Total Same Property Operating Expenses
SUN COMMUNITIES, INC.
As of December 31,
As of December 31,
Number of Properties 1)
Sites
MH and Annual RV sites
Transient RV sites
Total
MH & Annual RV Occupancy
Occupancy (2)
Average monthly base rent per site
% change in monthly base rent (3)
Rental Program Statistics included in MH:
Number of occupied sites, end of period (4)
Monthly rent per site - MH Rental Program
% change (4)
N/M = Not meaningful. N/A = Not applicable.
(1) Includes one MH property that was sold on December 30, 2025 and therefore included in 2025 full year Same Property results.
(2) Same Property adjusted blended occupancy for MH and RV combined increased to 99.1% at December 31, 2025, from 98.7% at December 31, 2024. The 40 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 98.6% at December 31, 2025, an increase of 50 basis points from 98.1% at December 31, 2024. Same Property blended occupancy for MH and RV increased by 160 basis points at 99.0% at December 31, 2024 from 97.4% at December 31, 2023.
(3) Calculated using actual results without rounding.
(4) 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 years ended December 31, 2025 and 2024 (in millions, except for statistical information):
Year Ended December 31,
Year Ended December 31,
% Change (2)
% Change (2)
Same Property Revenues
Real property (excluding transient)
Real property - transient
Total Same Property operating revenues
Same Property Expenses
Same Property operating expenses (3)
Real Property NOI (1)
Number of properties
(1) Same Property results for our UK properties reflect constant currency for comparative purposes. British pound sterling figures in the prior comparative period have been translated at the average exchange rate of $1.3183 USD per GBP, during year ended December 31, 2025. Prior to constant currency adjustments, UK Same Property NOI increased by 7.3% during the year ended December 31, 2025.
(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):
Year Ended December 31,
Year Ended December 31,
Utility revenue netted against related utility expense
SUN COMMUNITIES, INC.
As of December 31,
As of December 31,
Number of Properties
Sites
UK Transient
Occupancy (1)
Average monthly base rent per site
% change in monthly base rent (2)
(1) Adjusting for recently delivered and vacant expansion sites, Same Property adjusted occupancy decreased by 30 basis points year over year, to 89.7% at December 31, 2025, from 90.0% at December 31, 2024.
(2) Calculated using actual results without rounding.
For the years ended December 31, 2025 and 2024:
• The MH segment's increase in NOI of $56.0 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 $62.4 million, or 7.2% and NOI outperformance in our Rental Program. Real property (excluding transient) revenue increased primarily due to a 5.2% increase in monthly base rent.
• The RV segment's decrease in NOI of $4.1 million, or 1.4% when compared to the same period in 2024, is primarily due an increase in Same Property operating expenses of $4.3 million or 1.8% and a decrease in real property transient revenue of $21.1 million or 9.0%, partially offset by an increase in real property (excluding transient) revenue of $21.3 million or 7.5% due to conversions of transient RV sites to annual RV sites. The increase in Same Property operating expenses was primarily due to increases in utilities, real estate taxes, and other expenses.
• The UK segment increase in NOI of $2.7 million, or 3.5% when compared to the same period in 2024 is primarily due to a $4.2 million, or 4.1%, increase in real property (excluding transient) revenue and a $3.4 million, or 7.1%, increase in real property transient revenue; partially offset by an increase in Same Property operating expenses of $4.9 million, or 6.6%. The increase in real property (excluding transient) revenue was primarily due to a 4.1% 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.
For the years ended December 31, 2024 and 2023:
• The Same Property data for the comparative period includes all properties that we owned and operated continuously since January 1, 2023, exclusive of ground-up development and redevelopment properties recently completed or under construction, and other properties as determined by management.
• The MH segment's increase in NOI of $39.9 million, or 6.7% when compared to the same period in 2023, is primarily due to an increase in real property (excluding transient) revenue of $55.1 million, or 6.8%. Real property (excluding transient) revenue increased due to a 5.5% increase in monthly base rent.
• The RV segment's decrease in NOI of $8.0 million, or 2.8% when compared to the same period in 2023, is primarily due to a decrease in real property transient revenue of $27.5 million, or 11.0%, and an increase in Same Property operating expenses of $8.5 million or 3.8%, partially offset by an increase in real property (excluding transient) revenue of $28.0 million or 11.1%. 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 6.0% increase in monthly base rent and conversions of transient RV sites to annual RV sites.
• The UK segment increase in NOI of $6.2 million, or 9.0%, when compared to the same period in 2023, is primarily due to a $6.9 million, or 7.2%, increase in real property (excluding transient) revenue partially offset by an increase in Same Property operating expenses of $2.7 million, or 3.9%. The increase in real property (excluding transient) revenue was primarily due to an 8.4% increase in monthly base rent per site.
SUN COMMUNITIES, INC.
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, and former residents or customers.
The following table reflects certain financial and statistical information for our home sales program (in millions, except for average selling prices and other information):
Year Ended December 31,
Change
% Change
Financial Information
North America
Home sales
Home cost and selling expenses
NOI
NOI margin %
Home sales
Home cost and selling expenses
NOI
NOI margin %
Total
Home sales
Home cost and selling expenses
NOI
NOI margin %
Other information
Units Sold:
North America
Total home sales
Average Selling Price:
North America
NOI - North America
For the year ended December 31, 2025, the 42.7% decrease in NOI is primarily driven by a 21.8% decrease in total home sales volume as compared to the same period in 2024, primarily driven by fewer available sites in conjunction with reduced expansion and development activity.
NOI - UK
For the year ended December 31, 2025, the 19.1% decrease in NOI is primarily driven by a 6.8% decrease in NOI margin and a 4.9% decrease in total home sales volume, partially offset by a 7.7% increase in average selling price, as compared to the same period in 2024, primarily driven by increased competition in the region and changes in the mix of homes sold.
SUN COMMUNITIES, INC.
Other Items - Statements of Operations (1)
The following table summarizes other income and expenses (amounts in millions):
Year Ended December 31,
Change
% Change
Other Revenues
Ancillary, net
Interest
Brokerage commissions and other, net
Other Expenses
General and administrative expense
Catastrophic event-related charges, net
Depreciation and amortization
Asset impairments
Goodwill impairment
Loss on extinguishment of debt
Interest
Other Items
Gain / (loss) on foreign currency exchanges
Gain on dispositions of properties
Other income / (expense), net
Loss on remeasurement of notes receivable
Income from nonconsolidated affiliates
Gain / (loss) on remeasurement of investment in nonconsolidated affiliates
Current tax expense
Deferred tax benefit
Income from discontinued operations, net
Preferred return to preferred OP units / equity interests
Income attributable to noncontrolling interests
(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.
Interest income - for the year ended December 31, 2025, increased due to the interest earned on our increased cash balances driven by proceeds received from the Safe Harbor Sale.
Brokerage commissions and other, net - for the year ended December 31, 2025, decreased primarily due to decreased business interruption insurance proceeds received as compared to the prior year. Refer to Note 15, "Commitments and Contingencies," in our accompanying Consolidated Financial Statements for additional information.
Catastrophic event-related charges, net - for the year ended December 31, 2025, decreased primarily due to asset impairment and debris removal charges, net of insurance recoveries in the prior year, driven by Hurricanes Helene and Milton, and flooding at an RV community in New Hampshire.
Asset impairments - for the year ended December 31, 2025, increased due to asset impairment charges at 22 properties, primarily within the RV and UK segments, 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 14, "Fair Value Measurements," in our accompanying Consolidated Financial Statements for additional information.
Goodwill impairment - there were no goodwill impairment charges for the year ended December 31, 2025, as compared to goodwill impairment charges of $180.8 million in the prior year, driven by declines in the fair value of our Park Holidays reporting unit within the UK reporting segment. Refer to Note 5, "Goodwill and Other Intangible Assets," in our accompanying Consolidated Financial Statements for additional information.
Loss on extinguishment of debt - for the year ended December 31, 2025, increased primarily due to the recognition of early extinguishment premiums of $102.4 million in the current year, due to the settlement of $3.3 billion of debt obligations using proceeds generated from the Safe Harbor Sale. Refer to Note 7, "Debt and Line of Credit," in our accompanying Consolidated Financial Statements for additional information.
SUN COMMUNITIES, INC.
Interest expense - for the year ended December 31, 2025, decreased primarily due to the settlement of $3.3 billion in debt obligations using proceeds generated from the Safe Harbor Sale. Refer to Note 7, "Debt and Line of Credit," in our accompanying Consolidated Financial Statements for additional information.
Gain / (loss) on foreign currency exchanges - for the year ended December 31, 2025, was a gain of $26.7 million, as compared to a loss of $25.8 million during the same period in 2024, primarily due to a gain of $14.4 million from the settlement of six foreign currency forward swaps, as well as the weakening of the U.S. dollar versus the British pound sterling. Refer to Note 13, "Derivative Financial Instruments," in our accompanying Consolidated Financial Statements for additional information.
Gain on dispositions of properties - for the year ended December 31, 2025, was a gain of $5.1 million, as compared to a gain of $202.9 million during the same period in 2024, driven by property dispositions in each period. Refer to Note 3, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated Financial Statements for additional information.
Other income / (expense), net - for the year ended December 31, 2025, was income of $133.9 million, as compared to an expense of $6.8 million during the same period in 2024, primarily due to a gain of $68.5 million from an insurance settlement, and long-term lease terminationgains of $51.8 million from the repurchase of titles to 32 UK properties previously controlled via ground leases. Refer to Note 15, "Commitments and Contingencies," and Note 16, "Leases," in our accompanying Consolidated Financial Statements for additional information.
Loss on remeasurement of notes receivable - for the year ended December 31, 2025, decreased, primarily due to a fair value adjustment loss of $35.2 million in the prior year related to the sale of a portfolio of RV communities. Refer to Note 4, "Notes and Other Receivables," in our accompanying Consolidated Financial Statements for additional information.
Deferred tax benefit - for the year ended December 31, 2025, increased due to a tax benefit related to the sale of a UK land development parcel. Refer to Note 3, "Real Estate Acquisitions and Dispositions," in our accompanying Consolidated Financial Statements for additional information.
Income from discontinued operations, net - for the year ended December 31, 2025, increased due to a total gain of $1.5 billion recognized from the closing of the Safe Harbor Sale in the current period.
SUN COMMUNITIES, INC.
RECONCILIATION OF NET INCOME / (LOSS) ATTRIBUTABLE TO SUI COMMON SHAREHOLDERS TO FFO
The following table reconciles Net income / (loss) attributable to SUI common shareholders to FFO (in millions, except for per share amounts):
Year Ended December 31,
Net Income / (Loss) Attributable to SUI Common Shareholders
Adjustments
Depreciation and amortization - continuing operations
Depreciation and amortization - discontinued operations
Depreciation on nonconsolidated affiliates
Asset impairments - continuing operations
Asset impairments - discontinued operations
Goodwill impairment
Loss on remeasurement of marketable securities
(Gain) / loss on remeasurement of investment in nonconsolidated affiliates
Loss on remeasurement of notes receivable
Loss on remeasurement of Collateralized Receivables and Secured Borrowings
Gain on dispositions of properties, including tax effect - continuing operations
Gain on dispositions of properties, including tax effect - discontinued operations
Add: Returns on preferred OP units
Add: Income / (loss) attributable to noncontrolling interests
Gain on disposition of assets, net
FFO Attributable to SUI Common Shareholders and Convertible Securities (1)(5)
Adjustments
Business combination expense - continuing operations
Business combination expense - discontinued operations
Acquisition and other transaction costs - continuing operations (2)
Acquisition and other transaction costs - discontinued operations (2)
Loss on extinguishment of debt
Catastrophic event-related charges, net - continuing operations
Catastrophic event-related charges, net - discontinued operations
Loss of earnings - catastrophic event-related charges, net (3)
Accelerated deferred compensation amortization
(Gain) / loss on foreign currency exchanges
Deferred tax benefit
Long term lease termination (gains) / losses
Long term lease terminationlosses - discontinued operations
Gain on insurance settlement
Other adjustments, net - continuing operations (4)
Other adjustments, net - discontinued operations (4)
Core FFO Attributable to SUI Common Shareholders and Convertible Securities (1)(5)
Weighted Average Common Shares and OP Units Outstanding (1)
FFO Attributable to SUI Common Shareholders and Dilutive Convertible Securities Per Share (1)(5)
Core FFO Attributable to SUI Common Shareholders and Dilutive Convertible Securities Per Share (1)(5)
(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 years ended December 31, 2025, 2024, and 2023 (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.
SUN COMMUNITIES, INC.
(3) Loss of earnings - catastrophic event-related charges, net include the following:
Year Ended December 31,
Hurricane Ian - Estimated loss of earnings in excess of the applicable business interruption deductible
Hurricane Ian - Insurance recoveries realized for previously estimated loss of earnings
Hurricane Ian - Recognition of deferred lump sum insurance settlement
Other catastrophic weather event - Estimated loss of earnings in excess of the applicable business interruption deductible, net
Other catastrophic weather event - Insurance recoveries realized for previously estimated loss of earnings
Loss of earnings - catastrophic event-related charges, net
During the three months ended December 31, 2025, we received a settlement of $80.2 million from an insurance provider to settle all claims related to property, casualty, flood, and business interruption insurance recoveries from Hurricane Ian. We concluded that $36.5 million of the total settlement pertained to business interruption recoveries through 2027, which we recorded as a contingent gain per Accounting Standards Codification ("ASC") 450. To better reflect the underlying economics of the transaction, we have elected to defer the business interruption recovery gain and recognize revenue ratably through 2027 for our presentation of Core FFO.
(4) Other adjustments, net - continuing operations primarily relates to (i) derivative settlement activity during the year ended December 31, 2025, (ii) litigation activity during the years ended December 31, 2024 and 2023, (iii) ERP implementation costs during the years ended December 31, 2025 and 2024, (iv) gain on sale of investment in nonconsolidated affiliates during the years ended December 31, 2025 and 2023, and (v) insurance loss recovery expense and severance costs during the year ended December 31, 2024. Other adjustments, net - discontinued operations primarily relates to contingent consideration expense during the year ended December 31, 2025 and litigation settlement gains during the year ended December 31, 2024.
(5) FFO and Core FFO include discontinued operations activity of $7.4 million or $0.06 per Share, and $76.4 million or $0.58 per Share, respectively, during the year ended December 31, 2025, $268.7 million or $2.06 per Share, and $266.3 million or $2.05 per Share, respectively, during the year ended December 31, 2024, and $252.3 million, or $1.96 per share, and $262.2 million or $2.03 per share, respectively, during the year ended December 31, 2023.
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, 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 year ended December 31, 2025, we completed the closing of the Safe Harbor Sale for total net cash proceeds of $5.5 billion and recorded a gain on sale of $1.5 billion. The Safe Harbor Sale accelerates our strategy of focusing on our core business and significantly enhances our leverage profile and financial flexibility. 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. 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 are positioned for ongoing organic growth with expected rental rate increases, occupancy gains, and expense management. In 2026, 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 December 31, 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, the repurchase of 4.3 million shares of our common stock at an average cost of $125.62 per share for a total of $539.1 million, and a 10.6% increase to our regular cash distribution, to $1.04 per share.
• Targeted reinvestment in strategic growth by acquiring 11 MH properties and three RV properties for total cash consideration of $457.0 million, which was primarily sourced from 1031 exchange escrow accounts to minimize the tax impact from the Safe Harbor Sale. Refer to the "Acquisitions, Dispositions, Development, and Expansion Activities" section below for acquisitions that closed subsequent to December 31, 2025.
SUN COMMUNITIES, INC.
• Repurchased the titles to all 32 UK properties that were previously controlled via ground leases for total cash payments of $386.8 million, inclusive of fees and recoverable VAT taxes.
Refer to Part I, Item 1. "Business - Safe Harbor Sale," and Note 2, "Assets Held for Sale and Discontinued Operations," for additional details related to the Safe Harbor Sale. Refer to Note 16, "Leases," for additional details related to the UK long-term lease terminations.
Subject to market conditions, we intend to selectively identify opportunities to acquire existing properties and expand our development pipeline. 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 December 31, 2025, we had allocated restricted cash of $57.2 million into 1031 exchange escrow accounts to fund potential future MH and RV acquisitions. Given the higher interest rate environment, we continue to selectively pursue acquisition and development opportunities that meet our underwriting criteria. Refer to Note 3, "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):
Year Ended December 31,
Recurring Capital Expenditures
Non-Recurring Capital Expenditures and Related Activities
Lot modifications
Growth projects
Rebranding
Capital improvements to recent acquisitions
Expansion and development
Rental program
Other
Total Non-Recurring Capital Expenditure and Related Activities
Total Capital Expenditure and Related Activities
Recurring Capital Expenditures
Property recurring capital expenditures are necessary to maintain asset quality, including purchasing and replacing items used to operate the communities. Recurring capital expenditures at our MH, RV, and UK properties include major road, driveway and pool improvements; clubhouse renovations; adding or replacing streetlights; playground equipment; signage; maintenance facilities; manager housing; and property vehicles. The minimum capitalized amount is one thousand dollars.
Non-Recurring Capital Expenditures and Related Activities
Lot modifications - consist of expenditures incurred to modify the foundational structures required to set a new home after a previous home has been removed. These expenditures are necessary to create a revenue stream from a new site renter and often improve the quality of the community. Other lot modification expenditures include land improvements added to annual RV sites to aid in the conversion of transient RV guests to annual contracts.
Growth projects - consist of revenue generating or expense reducing activities at the properties. These include, but are not limited to, utility efficiency and renewable energy projects, site or amenity upgrades such as the addition of a garage or shed, and other special capital projects that substantiate an incremental rental increase.
Rebranding - includes new signage at our RV communities and the costs of building an RV mobile application and updated website.
Capital improvements to recent acquisitions - often require 24 to 36 months to complete after closing and include upgrading clubhouses; landscaping; new street light systems; new mail delivery systems; pool renovations including larger decks, heaters and furniture; new maintenance facilities; lot modifications; and new signage including main signs and internal road signs.
Expansion and development expenditures - consist primarily of construction costs such as roads, activities, and amenities, and costs necessary to complete site improvements, such as driveways, sidewalks, and landscaping at our MH, RV, and UK communities. Expenditures also include costs to rebuild after damage has been incurred at our properties.
SUN COMMUNITIES, INC.
Rental program - consists of investment in the acquisition of homes intended for the rental program and the purchase of vacation rental homes at our RV communities. Expenditures for these investments depend upon the condition of the markets for repossessions and new home sales, rental homes, and vacation rental homes.
Cash Flow Activities
Our cash flow activities from continuing operations are summarized as follows (in millions):
Year Ended December 31,
Net Cash Provided By Operating Activities
Net Cash Used For Investing Activities
Net Cash Provided By / (Used For) Financing Activities
Cash, cash equivalents and restricted cash increased by $579.0 million from $57.1 million as of December 31, 2024, to $636.1 million as of December 31, 2025.
Operating activities - Net cash provided by operating activities increased by $197.7 million to $808.0 million for the year ended December 31, 2025, compared to $610.3 million for the year ended December 31, 2024. The increase in operating cash flow was primarily due to growth in Same Property operating performance at our MH and UK properties and a reduction in interest expense of $129.3 million in the current period due to the settlement of $3.3 billion in debt obligations using proceeds generated from the Safe Harbor Sale, partially offset by reduced operating performance at our RV properties during the year ended December 31, 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 in this Annual Report on Form 10-K.
Investing activities - Net cash used for investing activities increased by $560.3 million to $602.9 million for the year ended December 31, 2025, compared to $42.6 million for the year ended December 31, 2024. The increase in Net cash used for investing activities was primarily driven by an increase in cash deployed to acquire properties and a decrease in cash proceeds received from disposition activity during the year ended December 31, 2025 as compared to the corresponding period in 2024.
Financing activities - Net cash provided by financing activities was $372.2 million for the year ended December 31, 2025, compared to net cash used for financing activities of $547.3 million for the year ended December 31, 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 distribution paid in May 2025 during the year ended December 31, 2025 as compared to the corresponding period in 2024. Refer to Note 7, "Debt and Line of Credit" and Note 8, "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):
Year Ended December 31,
Net cash provided by operating activities - discontinued operations
Net cash provided by / (used for) investing activities - discontinued operations
Net cash used for financing activities - discontinued operations
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 December 31, 2025.
SUN COMMUNITIES, INC.
Operating activities - Net cash provided by operating activities for discontinued operations decreased by $194.5 million to $56.2 million for the year ended December 31, 2025, compared to $250.7 million for the year ended December 31, 2024. The decrease in net cash provided by operating activities for discontinued operations was due to the closing of the Safe Harbor Sale during the year ended December 31, 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 year ended December 31, 2025, compared to net cash used for investing activities for discontinued operations of $224.8 million for the year ended December 31, 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 increased by $5.6 billion to $5.6 billion for the year ended December 31, 2025, compared to $24.3 million for the year ended December 31, 2024. The increase in net cash used for financing activities for discontinued operations is due to the net capital transfer of $5.6 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 year ended December 31, 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.
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 December 31, 2025, 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 an At the Market Offering Sales Agreement (the "ATM") 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 December 31, 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.
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.
Carrying Amount at December 31,
Principal Amount
5.5% notes, issued in January 2024 and due in January 2029 (the "2029 Notes")
5.7% notes, issued in January 2023 and due in January 2033 (the "2033 Notes")
4.2% notes, issued in April 2022 and due in April 2032
2.3% notes, issued in October 2021 and due in November 2028
2.7% notes, issued in June 2021 and October 2021, and due in July 2031
Total
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 (the "2029 and 2033 Note Redemptions"). 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 13, "Derivative Financial Instruments," for cash flow hedge activity resulting from the redemptions.
SUN COMMUNITIES, INC.
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
In September 2025, we entered into a credit agreement (the "New Credit Agreement"). Pursuant to the New Credit Agreement, we may borrow up to $2.0 billion under a senior credit facility consisting of a revolving loan. The New Credit Agreement also permits, subject to the satisfaction of certain conditions, additional borrowings of $1.0 billion. The senior 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. As of December 31, 2025, there were no borrowings under the senior credit facility.
Refer to Note 7, "Debt and Line of Credit," for additional information.
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:
Covenant (1)
Requirement
As of December 31, 2025
Maximum leverage ratio
Minimum fixed charge coverage ratio
Maximum secured leverage ratio
(1) As of December 31, 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:
Covenant
Requirement
As of December 31, 2025
Total debt to total assets
Secured debt to total assets
Consolidated income available for debt service to debt service
Unencumbered total asset value to total unsecured debt
As of December 31, 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 December 31, 2025 we had unrestricted cash on hand of $569.6 million, $2.0 billion of remaining capacity on the senior credit facility, and a total of 403 unencumbered MH, RV, and UK properties.
SUN COMMUNITIES, INC.
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. Refer to "Risk Factors" in Part I, Item 1A of this Annual Report on Form 10-K. 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 December 31, 2025, our debt has a weighted average interest rate of 3.38% and a weighted average maturity of 7.1 years.
Capital Requirements
Our capital requirements as of December 31, 2025 include both short and long-term obligations:
Our primary long-term liquidity needs are principal payments on outstanding debt as summarized in the table below:
Payments Due By Period (in millions)
Outstanding Debt (1)
Total Due
Short-term Obligation ≤1 Year
Long-term Obligation After 1 Year
Refer to
Principal payments on long-term debt
Note 7. Debt and Line of Credit
Interest expense (2)
Operating leases
Note 16. Leases
Finance lease
Note 16. Leases
Total Outstanding Debt
(1) Our outstanding debt in this table excludes debt premiums, discounts, deferred financing costs, and fair value adjustments, as applicable.
(2) Our obligations related to interest expense are calculated based on the current debt levels, rates, and maturities as of December 31, 2025 (including finance leases), and actual payments required in future periods may be different than the amounts included above. Perpetual securities include one year of interest expense for payment due after five years.
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 6, "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 December 31, 2025 and 2024, the aggregate carrying amount of debt, including both our and our partner's share, incurred by GTSC was $213.0 million (of which our proportionate share is $85.2 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 $36.1 million converted at the December 31, 2025 exchange rate. As of December 31, 2025 and 2024, the aggregate carrying amount of the debt, including both our and our partners' share, incurred by Sungenia JV was $20.8 million (of which our proportionate share is approximately $10.4 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.
SUN COMMUNITIES, INC.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our Consolidated Financial Statements are prepared in accordance with US GAAP, which require the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses in the periods presented. We believe that the accounting estimates employed are appropriate and resulting balances are reasonable; however, due to inherent uncertainties in making estimates, actual results could differ from the original estimates, requiring adjustments to these balances in future periods. Refer to Note 1, "Significant Accounting Policies," in our accompanying Consolidated Financial Statements for additional information regarding our significant accounting policies.
Impairment of Long-lived Assets
We review the carrying value of long-lived assets to be held for use for impairment quarterly or whenever events or changes in circumstances indicate a possible impairment. Future events could occur which would cause us to conclude that impairment indicators exist, and significant adverse changes in national, regional, or local market conditions or trends may cause us to change the estimates and assumptions used in our impairment analysis. The results of an impairment analysis could be material to our financial statements. Our primary indicators for potential impairment include a reduction in projected future cash flows and deteriorating NOI trends period over period. Circumstances that may prompt a test of recoverability may include a significant decrease in the anticipated market price, an adverse change to the extent or manner in which an asset may be used or in its physical condition, or other events that may significantly change the value of the long-lived asset. Any adverse change in these factors could cause an impairment in our assets, including our investment in real estate.
An impairmentloss is recognized when a long-lived asset's carrying value is not recoverable and exceeds estimated fair value. We estimate the fair value of our long-lived assets based on discounted future cash flows and any potential disposition proceeds for a given asset. Forecasting cash flows requires management to make estimates and assumptions about such variables as the estimated holding period, rental rates, occupancy, development and operating expenses during the holding period, as well as capitalization rates. Management uses its best judgment when developing these estimates and assumptions.
During the years ended December 31, 2025 and 2024, we recognized long-lived asset impairment charges of $386.7 million and $66.7 million, respectively. The asset impairment charges were primarily driven by a contemplated change in strategic plan and deteriorating cash flow and NOI trends pertaining to certain RV and UK properties. Refer to Note 14, "Fair Value Measurements," for additional information regarding these non-recurring fair value measurements.
Impact of New Accounting Standards
Refer to Note 18, "Recent Accounting Pronouncements," in our accompanying Consolidated Financial Statements for information regarding new accounting pronouncements.
