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 enhance our occupancy levels, property performance and cash flows. Our RV communities are designed to offer affordable vacation opportunities to individuals and families complemented by a diverse selection of high-quality amenities. In the United Kingdom, our UK communities are referred to as "holiday parks" and are located predominantly at irreplaceable seaside destinations in the south of England. We provide holiday home sales and associated site license activities to holiday homeowners in our communities.
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 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 termination gains 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 termination losses - 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.
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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 in our assets, including our investment in real estate.
An impairment loss 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.
